200 M.E.J. Nielsen and C.S.

Frederiksen

European companies when it comes to motives for implementing CSR activities, at

least as concerns the self-reported motivation of companies.
Now, if 75 % of Danish SMEs where engaged in CSR activities in 2005, then it
might seem reasonable to expect that today an even larger part of Danish companies
(maybe as high as 80 or 90 %) have implemented CSR activities. The reason for this
optimistic estimate is that we have data which indicates that since 2005 CSR is
becoming more and not less widespread. One example of this trend is stated in an
action plan for CSR presented by the Danish government in 2012. Here it is stated
that: “The number of Danish companies that have adopted the UN Global Compact
has increased steadily from 38 companies in 2008 to 200 today” (The Danish
Government, 2012, p. 4).
Hence, The Danish Government’s objective—stated in the 2008 action plan for
CSR—of encouraging Danish companies to engage in CSR (see more about the
Danish Governments plans for CSR below) almost seems to be fulfilled before
getting off the ground. However, it is worth to notice that other and more recent
surveys reach different conclusions as concerns the CSR commitment of Danish
Companies. First, a survey by the Danish consulting firm Succes med CSR and the
newspaper Berlingske Tidende conducted among 650 of the 1,000 largest Danish
Companies, conclude that almost two-thirds of Danish companies have not
implemented any CSR policy (Springborg & Ostrynski, 2009). This survey is in
line with a survey conducted by the Danish Association of Managers and Execu-
tives which showed that only about 40 % of Danish companies are working actively
and systematically with CSR (Lederne, 2009). It is difficult to say which survey that
hit the mark, and we do not want to go into a long debate about that here—however,
it is important to notice that the different results might be due to a difference in
opinion regarding what it implies to be working with CSR. As noted in a report by
the Danish Council for Corporate Responsibility, more than three quarters of
Danish companies are working with CSR-related areas (including social and envi-
ronmental areas), but at the same time two out of three of the Danish companies did
not have any strategy or policy in regards to CSR, meaning that a lot of Danish
companies seem to be working with CSR but without defining it as CSR (Rådet for
Samfundsansvar, 2010).
As a final note on the level of CSR engagement it is worth to notice a survey
conducted by the British think-tank Accountability in 2007 regarding responsible
business operations in 108 countries. In this regard Denmark came in second
(behind Sweden) in the “Responsible Competitiveness Index” (The Danish Gov-
ernment, 2008). Also, in a more recent survey presented by the world economic
Forum Denmark is number 7 (out of 148 countries) when it comes to the ethical
behaviour of firms (World Economic Forum, 2013).
One leading CSR consultant (Christian Honore of KPMG Denmark) emphasized
two issues that preoccupy Danish companies engaged in CSR in the recent years.
First, a focus on “materiality”, which can be seen as a concept pertaining to the
instrumentally driven value for the company e.g. in terms of boosted brand value or
improved/sustained stakeholder relations etc. of CSR engagements; as a normative
concept about the value or relative importance of various CSR activities; or both.
Political Institutions and Corporate Social Responsibility: A Nordic Welfare. . . 201

Naturally, the focus on prioritization and “value for money” (either literally or
metaphorically) goes hand in hand with the less favourable business environments
of the financial crisis of the late 2000s and early 2010s. Second, most companies
heavily involved in international transactions has been focusing on anti-corruption,
which probably reflects the ever increasing focus on business relations with the
BRIC countries.

2.3 The Relation Between Government and CSR in Denmark

According to Vallentin’s analysis (see Vallentin, 2013), one can tease out three
different overall aims or “governmentalities” associated with the Danish state’s
engagement with CSR. From the early to mid-1990s an onwards an inclusiveness
regime, focusing on “the inclusive labour market”; a competitiveness regime,
associated with the instrumental value of CSR from the early to late 2000s,
followed by a (partly emerging) accountability regime, with a more mixed focus
on both classic CSR issues and competitive edge (see below). It is instructive to
spell out a bit of the details associated with each of these phases:
The inclusiveness regime focused, as mentioned, on the inclusive labour market:
“. . .inclusion of weak and marginalized groups (immigrants, disabled and long-
term unemployed people etc.), the campaign was about preventing unemployment,
retaining employees through reassignment after illness or accidents, and integrat-
ing people into the workforce. . .” (Vallentin, 2013, p. 6). Even though the specific
focus on inclusiveness is only superficially manifest in current government initia-
tives, one should not underestimate the continued impact of this first phase of
state—business cooperation: CSR is still very much associated with businesses
effort to make an “extra” contribution vis-à-vis in terms of important social goals in
the labour market in Denmark.
The competitiveness regime focused on CSR as a means to profit and competitive
advantage, and emerged partly as the result of a political shift from the 1990s,
where governments were dominated by various alliances led by the social demo-
cratic party, to a liberal-conservative domination throughout the first decade of the
2000s. However, clearly, this shift reflected similar moves in the CSR literature
with increased focus on “shared value” and, in broad terms, the strategic business
potential of CSR.

2.4 The Government’s Current Action Plans for CSR

and the Accountability Regime

In 2008 the Danish Government presented its first official action plan for CSR (The
Danish Government, 2008). The aim was to support Danish businesses in their work
202 M.E.J. Nielsen and C.S. Frederiksen

with CSR, and the government emphasized that the action plan focused on
business-driven CSR. In this regard, the Danish Government stated that “the action
plan aims to help Danish businesses reap more benefit from being a global
frontrunner in the matter of corporate social responsibility” (The Danish Govern-
ment, 2008, p. 7). The governmental action plan contained 30 concrete CSR-related
initiatives in the following four key areas: (1) propagating business-driven CSR;
(2) promoting businesses’ social responsibility through Government activities;
(3) corporate sector’s climate responsibility; (4) marketing Denmark for responsi-
ble growth. One of the concrete initiatives was the Government’s plan to make CSR
reporting mandatory for large business operating in Denmark. In this regards the
Danish Government stated:
The duty to report will encourage more openness, thus strengthening shareholders’, cus-
tomers’ and members’ opportunities to take a stance on businesses’ and investors’ CSR
work. Another objective of the duty to report lies in the fact that the more businesses and
investors who actively decide on CSR and communicate their decision to the public, the
stronger a position Denmark will enjoy internationally as a country known for responsible
growth. The cumulative effect can bolster Danish businesses’ market shares (The Danish
Government, 2008, p. 21).

The mandatory reporting initiative would thus, according to the Danish Gov-
ernment, not just be a win-win situation but a triple win situation, benefitting first
the stakeholders (due to increased transparency), second Denmark as a nation and
third the Danish businesses’ (both benefitting from the positive publicity that the
mandatory CSR reporting was expected to have). The reporting initiative, which
was later supported by the Danish parliament (since 2009 large companies operat-
ing in Denmark has been obligated to report about their CSR activities), is a good
example of the Danish Government’s view on CSR as something benefiting society
as a whole (and sometimes in addition specific stakeholder groups) as well as the
corporate sector. The potential (and not completely unrealistic) conflict between
maximizing profit and benefiting society is totally absent in the 2008 action plan.
This hardly being a big surprise since, as noted above, the Danish Government
explicitly declared that it focused exclusively on business-driven CSR.
In 2012 the Danish Government presented its second official action plan for CSR
(The Danish Government, 2012). In this plan the focus is still on business-driven
CSR, however some might find that the tone has (slightly) changed when, for
instance, the Danish Government in the beginning of its report states:
This action plan does not only look at the companies and their business interests in
implementing social responsibility. It is the Government’s ambition that both human and
natural resources in Denmark should be used in a way that is both sustainable and
competitive. This applies nationally as well as internationally. Social responsibility is
therefore about ensuring that growth and responsibility go hand in hand, creating shared
value for both companies and society (The Danish Government, 2012, p. 3).

At first sight this seems to indicate that the Danish Government this time around
acknowledges the potential conflict between business and society. The need to
ensure that growth and responsibility go hand in hand seems to imply that poten-
tially growth and responsibility could conflict. However, later in the report the
Political Institutions and Corporate Social Responsibility: A Nordic Welfare. . . 203

Danish Government seem to deny any such potential conflict when it states that
“Responsible conduct and growth should not be regarded as conflicting goals.
Responsible conduct and growth go hand in hand, (. . .)” (The Danish Government,
2012, p. 4). Now, we are not claiming that the Danish Government denies that
business and society can have conflicting interests. Such a position would be
downright foolish—some companies would (and some do) benefit financially if
(or because) they do not behave socially responsible e.g. by paying bribes or
polluting (notice, the motive for paying bribes, polluting and violating other
international recognized CSR codes seems to be a financial one, strongly indicating
that CSR and maximizing profit sometimes conflict). What we are claiming, and
what the quotes above (in our view) clearly illustrate is that the Danish Govern-
ment, like so many others dealing with CSR, disregards or downplays the potential
conflict between maximizing profit and acting socially responsible.

3 Government and CSR: CSR as Extra-Legal Activities?

In many respects, the state is a very active player in the Danish practice of CSR.
One might call the present state of affairs a form of “government CSR”. As pointed
out by Vallentin (2011) the fact that the Danish welfare stated is highly regulated
when it comes to classical CSR-related issues, including the labour market, envi-
ronmental issues etc. means that the Danish companies are starting at a very high
level compared to companies from less regulated countries. To many, the notion of
government CSR probably sounds wrong or conceptually distorted. CSR, it might
be said, is precisely voluntary actions, undertaken by businesses, that go beyond
what is mandated or enforced by the state through its laws. CSR, many maintain, is
“extra-legal”, and a distinction must be made between activities that are regulated
and mandated by the law on one hand, and the area of voluntary actions that go
beyond the demands of the state and law (the area of CSR) on the other.
However, we believe that this is an unfortunate, untenable distinction. In
essence, there are two problems: First, law is not only enforcing, demanding, or
restricting. It has enabling functions as well, and many voluntary (i.e.,
non-enforced, non-mandatory) actions undertaken by businesses in the name of
CSR rely on the enabling character of the law. Secondly, on the premise that CSR
has an ethical dimension that is not wholly reducible to instrumental consider-
ations—in other words, on the premise that CSR is not simply some sort of
marketing or branding tool—it becomes unclear why we should distinguish
between legal and extra-legal activities. If the point of CSR activities is to pursue
some ethical desirable state of affairs—or fulfil some moral obligation—then
whether or not something is demanded by law or not seems to be wholly irrelevant.
Allow us to elaborate:
The enabling features of law. In CSR and in business studies in general, there
seems to be a very restricted view of the function of law: Law demands, restricts,
and mandates enforcement in cases of non-compliance. However, reflection soon
204 M.E.J. Nielsen and C.S. Frederiksen

reveals that law plays other, more positive roles. Law does not only assign duties
and liabilities; it also gives privileges, assigns immunities, and creates opportunities
and institutions. There is a host of cherished institutions and practices that cannot
(at least: cannot in the conventional sense) exist without the enabling, creative
sense of law: marriages, contracts, practices that require some official recognition
such as medical doctor or lawyer, and so on and so forth. One might, in a lawless
society, occupy a special role such as “negotiator” or “arbiter”, but one could not be
a lawyer, an accountant, a finance banker etc. These roles are enabled by law.
We maintain that if one is aware of the enabling feature of law, then the
distinction between legally regulated actions on the one hand and “extra-legal”
actions on the other becomes conceptually muddled. To take a very simple exam-
ple: a company could not undertake the voluntary action of donating money to some
local, CSR-related initiative if it weren’t for the law, which enables and supports a
system of money. Law is essentially involved in any event. It is true that one might
reconstruct the distinction, so that the operational difference is between legally
demanded actions on the one hand, and legally enabled actions on the other (rather
than the cruder “legal” vs. “extra-legal” distinction), and then maintain that “true”
CSR-activities are “merely” enabled by law as opposed to demanded by law.
Hence, “true” CSR is definable in terms of “voluntary,” actions, including such
that are legally enabled. However, it becomes unclear why one would want to fixate
on CSR’s relation to the law once one pays attention to the ethical underpinnings of
CSR, to which we now turn.

3.1 CSR and Ethics

Assume that the point of CSR—why we think it is a valuable activity—is not

wholly reducible to instrumental considerations of profit maximizing, branding etc.,
but that CSR (at least also) involves a moral dimension. This is not the right place to
go into a lengthy debate about which normative theory is the best as a foundation for
CSR. We claim, nevertheless, that adopting any plausible normative theory as a
basis for reasoning about CSR undermines the distinction necessary for the pro-
ponents of the thesis that only “extra-legal” or “voluntary, including legally
enabled” actions are “true” CSR:
Imagine two quite similar companies, A and B, that operate in two separate
jurisdictions, a and b. The relevant main differences of a and b pertains to some
CSR-relevant legal regulation, say, of environmental impact (“ecological foot-
print”). In a, the state does not enforce any strict regulation of pollution or use of
natural resources, whereas in b, the state enforces some rather demanding restric-
tions. Imagine, now, that the actual practices of both companies are exactly the
same: Even though company A could pollute on a much higher level without any
legal repercussions due to the lax regime of a, they do in fact live up to all the
demands and standards imposed by regime b (and company B lives up to the exact
demands of jurisdiction b).
Political Institutions and Corporate Social Responsibility: A Nordic Welfare. . . 205

Upholding the distinction between extra-legal (or voluntary, legally enabled)

actions and legally mandatory actions seems simply irrelevant for any ethical
assessment of the actions of the two companies, yet, if one sticks to the distinction,
one has to say that company A (since they undertake voluntary, and, ex hypothesis
socially or environmentally desirable actions) is somehow morally superior to
B. But why? The environmental impact of the two companies is the same. More-
over, imagine that company A does not engage in any voluntary actions to reduce
pollution, and B still fulfils their (legal) obligations. One would then say that, as
concerns CSR, these companies are on the same level (since both A and B “merely”
fulfils their legal obligations). But that, of course, also seems wrong: surely,
company B is superior in a CSR-relevant way by having a lighter ecological impact
than A.
Some might protest and say that there is something morally praiseworthy in the
actions of company A: after all, they voluntarily engage in environmentally bene-
ficial practices. However, it is hard to come up with any robust rationale why this
should earn any special moral praise for the company. Imagine, again, two juris-
dictions where a does not disallow husbands to beat their wives whereas b does
impose legal sanctions on such brutality. If a husband in a does not beat his wife, it
seems almost childish to insist that his (in-)actions are more morally praiseworthy
than his counterpart in b who also abstains from violence. Morality does not include
cookie-points; at least we cannot think of any serious moral philosopher or variant
of normative ethics that would justify such a conclusion.
We have engaged in this rather lengthy detour to make the point that one cannot
conclude that companies in highly regulated legal circumstances are any less
involved in CSR when they perform in ways that in other jurisdictions with less
regulation would count as archetypical CSR-activities. However, one should not
generalize this point too broadly. Surely, in some circumstances, voluntarily
adopting codes of conducts or standards that are more ethically exacting than
those demanded of relevant jurisdictions means that the company in question fights
on an uneven playing field (e.g. if local competitors win a competitive edge in not
adopting the higher standard). Voluntarily accepting such a burden might in special
cases give reasonable grounds for praising a company for special moral courage or
zeal. This, however, does not pertain to the key claim: that there are no good
reasons to focus on the legal/extra-legal distinction in conceptualizing CSR.
This last point is, to some extent, in line with the new definition of CSR adopted
by the European Commission. Notice, however, that previously the Commission
endorsed an understanding of CSR emphasising its voluntary aspect, which is also
noted by the Commission:
The European Commission has previously defined Corporate Social Responsibility (CSR)
as ‘a concept whereby companies integrate social and environmental concerns in their
business operations and in their interaction with their stakeholders on a voluntary basis’
(EU Commission, 2011, p. 2).

However, as per 2011, the Commission puts forward a new proposal for under-
standing CSR: “The Commission puts forward a new definition of CSR as ‘the
206 M.E.J. Nielsen and C.S. Frederiksen

responsibility of enterprises for their impacts on society’ (EU Commission, 2011,

p. 6). Surely, moving from an definition that underscores voluntary action to a much
broader conception emphasising “responsibility for impacts” is in line with our
considerations in the above.
However, neither “impacts” nor “responsibility” is defined in any clear and
precise terms (perhaps a rather daunting task in the first place). Specifically, there
are no attempts to define mandatory action (apart from the obvious reminder that
companies should follow the law). It follows that there is still room for (much)
diversity and interpretation of when some policy or action is legal or extralegal,
even if in principle the definition which is proposed by the Commission could
encompass all of the actions of companies. Moreover, despite the statement from
the Commission, we aver that many scholars and a lot of companies still associate
CSR primarily with actions that, somehow, go beyond the mere letter of law.
In sum: If we are right that Danish companies in general work in a relatively
more regulated and “ethically demanding” environment, and one insists that only
extra-legal activities are CSR-activities, it should follow that, ceteris paribus, the
scope of possible CSR-actions for Danish companies is more restricted, given
considerations of international competition. However, looking at the relative
impact vis-à-vis social and environmental issues of Danish companies, it does not
seem reasonable to claim that Danish companies should score especially low on any
CSR-index—and, as we have noted earlier, this is indeed not the case.

4 Some Future Issues and Perspectives

In this section, we wish to put forward to conjectures about the shape of CSR in
Denmark in the coming years. We focus on two issues: work/life balance (and
related themes) and inclusion of workers on the fringe of the labour market.
There is a strong tradition in Denmark for prioritizing workplace issues and
worker’s rights in CSR practices. However, only few sustained attempts to address
the “new pathologies” affiliated with contemporary work life—collapse of the
work/life balance, stress, and so on—have been made. However, especially as
concerns knowledge heavy workplaces, where transaction costs of replacing an
employee can be extremely high, there seems to be the basis for a “win-win”
scenario when it comes to more focus on protection of the workforce against stress
etc. Of course, it is probably harder to formalize many aspects of this problem—
how do one measure how much of an employee’s thoughts are devoted to his or her
work in his or her spare time?—And so the problem does not lend itself to clear cut
measures and benchmarks. This might partly explain the lack of effort in the area.
But we conjecture that this could be an upcoming CSR issue.
As indicated in the above, unions and employers’ organizations play a very
important role in the Danish labour market. While this has created a state of affairs
in which “proper” workers (roughly: full time employed organized workers) enjoy a
relatively desirable range of benefits and protections, it has not been to the benefit of
Political Institutions and Corporate Social Responsibility: A Nordic Welfare. . . 207

the so-called “precariat” (Standing, 2011), the class of persons on the fringe of the
organized labour market with part time and/or short time contracts—free lancers,
“burger flippers” etc. An ambitious future CSR policy will have to face up to the
fact that more and more people work on this fringe—voluntarily or otherwise, and
again, we foresee that this will begin to emerge as a CSR issue in the coming years.

5 Conclusion

If one takes outset in a standard definition of CSR as “voluntary actions with

positive social/or and environmental impact that go beyond and above what is
required by legislation”, one could argue that businesses and organizations in
Denmark are in fact not especially engaged in CSR! However, we have argued
that this is a wrongheaded notion of CSR: We should not identify CSR or
CSR-policies with actions that go beyond and above that what is required by
legislation; rather, we need to compare the actual social and environmental
impact—positive or negative—of businesses in an assessment of their CSR engage-
ment, whether or not this is legally regulated or not.
This should not read as an apology for Danish businesses and organizations.
Even though the field of possibilities for undertaking CSR activities—for contrib-
uting positively to social and environmental issues—is different in a highly regu-
lated context such as the Danish, the conclusions that “we have nothing left to do”
or “we are already burdened by so much government intervention that it is impos-
sible for us to undertake any further responsibilities” are, we believe, poor excuses.

Acknowledgements We wish to acknowledge the help of Steen Vallentin, Copenhagen Business

School, and Christian Honore KPMG Denmark, and thank them for their generous sharing of
knowledge.

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Corporate Social Responsibility in Finland:
From Local Movements to Global
Responsibility

Mirja Mikkilä, Virgilio Panapanaan, and Lassi Linnanen

1 The Blurred Concept of Corporate (Social)

Responsibility

The public have been preoccupied with the ethics of economic activities ever since
the market economy began to emerge over 750 years ago (de George, 1987; Vogel,
1991). Business enterprises have always had to consider responsibility issues in
their relations with the surrounding society, although the content of that responsi-
bility has altered, as it inevitably reflects changes in the societal situation and debate
with time and place.
The debate and research around the concept of corporate responsibility are
lively, but the content of the terminology used often remains blurred for many
people, whether they represent political affiliations, business or research. Responsi-
bility in business has been described since the 1970s with various concepts such as
corporate social responsibility, corporate responsibility, responsible business and
sustainability, and the definitions of these concepts have been diverse.
In Finland, the business related responsibility focus has varied in time covering
all three dimensions, originating from the definition of Sustainable development by
Brundlandt’s committee in the late 1980s, namely economic, social and environ-
mental responsibility. Hence, “corporate responsibility” (CR) was considered here
the most applicable concept covering the diversity of responsibility and providing a
comprehensive understanding of the phenomenon in a Nordic state.

M. Mikkilä (*) • V. Panapanaan • L. Linnanen

Lappeenranta University of Technology, Lappeenranta, Finland
e-mail: [email protected]

© Springer International Publishing Switzerland 2015 209

S.O. Idowu et al. (eds.), Corporate Social Responsibility in Europe, CSR,
Sustainability, Ethics & Governance, DOI 10.1007/978-3-319-13566-3_12
210 M. Mikkilä et al.

2 Historical Development of Corporate Responsibility

2.1 From Industrialization to the Welfare State: From

the Late Nineteenth Century to 1950s

The historical development of corporate responsibility in Finland can be divided

into three phases: industrialization, emerging of environmental awareness and
globalization. In this regard, Finland has followed much the practices of the Nordic
and Central European countries.
The economic development of the industrializing Europe in the nineteenth
century was based, to a great extent, on low labor costs and abundant natural
resources in addition to the new available technologies. This led to the first criticism
of industries in the late nineteenth century, when industrial workers and
impoverished rural population started to claim their rights (Mikkilä, Kolehmainen,
& Pukkala, 2005).
Few open-minded industrial owners and landlords carried their responsibility
towards industrial and agrarian workers by establishing simple social services for
the employees and their families. In Finland, the trade union was born in 1907 when
workers demanded to limit the daily working time to 8 h. In those days, for
example, a pulp and paper producer, Kymi Oy signed an agreement with Finnish
Paper Workers’ Union on 8 h working time in three shifts in 1907, although 14 or
even 16 h working time per day was a common practice (Ala-Kapee & Valkonen,
1982).
Simultaneously with the industrialization and related social debate, Finland
unified the forces into the movement for Finland’s independence after the revolu-
tion in Russia in the end of the First World War. After Finland’s declaration of
independence from the Russian Republic in 1917, the 8 h working time was ratified
by a law in the same year (SAK, 2014). Regardless of this step, a significant share of
industrial and agrarian workers complained on overall working conditions and
related rights. The contradictions between the labor movement or the socialists
and the upper and middle class culminated in the civil war in 1918.
The representatives of labor side lost the traumatic war, but the value of labor in
terms of steady production and productivity became concrete. As a consequence,
larger number of industry owners increased their voluntary social responsibilities
towards the labor and surrounding societies. An era of stable industrial develop-
ment started when the owners demonstrated comprehensive social responsibility by
building churches, schools and houses; borrowing money; providing health care
and establishing various sport clubs for the industrial societies between the two
World Wars.
The building of the so-called Nordic welfare society started after the Second
World War. The position of the trade unions was strengthened. The social legis-
lation and labor code were developed leading to the further development of working
time and conditions. The public sector developed and took a larger responsibility of
arranging and guaranteeing equal social services for all citizens (Harmaala &
Corporate Social Responsibility in Finland: From Local Movements to Global. . . 211

Jallinoja, 2012; Juutinen & Steiner, 2010). The expectations on the social responsi-
bility of the private sector were clearly lower compared to the pre-war era, even
though the companies still had a significant role in providing employees’ health
services and other benefits as a part of their human resource policy and responsi-
bility as employers (Juholin, 2004).

2.2 The Rise of Environmental Concern: The Period

Between 1960s and 1980s

The industrialization boosted the economic growth, but it had its side-effects on the
operation environment. The use of machineries and building of factories led to mass
production, which in turn led to numerous environmental impacts, such as pollution
of water and air systems. Many of these impacts were relatively local, and the
effects on the environment could only be seen clearly years later. The industrial
working places and options to become wealth were appreciated higher than the
relatively invisible industrial environmental impact. Additionally, scientific knowl-
edge about these problems was limited and long term effects of pollution were not
yet well understood at that time (Harmaala & Jallinoja, 2012; The Industrial
Revolution and Its Impact on Our Environment, 2012).
The public became aware of global environmental limitations in the 1960s,
partly as a consequence of Rachel Carson’s well-known novel “Silent Spring” in
1962. Another milestone for the modern environmental movement was the book
“Limits to growth” by the Club of Rome Club in 1972, which emphasized the
connection between the economic growth, population and environmental degrada-
tion. The start of the environmental movement was reflected also in Finland by the
establishment of the first environmental non-governmental organization, WWF
Finland in 1972 (WWF, 2014).
The first and most visible environmental criticism was targeted at the pulp and
paper industry and related forestry in the late 1970s until the early 1980s due to its
visibility of the operations to a large number of people. The industry has been
among the cornerstones of the Finnish economy since the beginning of industrial-
ization. Historically, commercial centers and wood processing plants were
established along good water transport routes, both inlands and by the seaside.
Due to this, majority of the production units were located at the close proximity of
communities. In addition, raw materials, like roundwood, were produced in large
land areas of land.
The increased environmental awareness and economic welfare led to intensive
public movements by the local people and representatives of the environmental
non-governmental organization and consequent media visibility. The industry was
criticized for the utilization of indigenous forests as industrial raw material and
intensive forest fertilizations in state owned forests. Also, the production techniques
were subjected to criticism on account of their pollution effects.
212 M. Mikkilä et al.

2.3 Globalization and Corporate Social Responsibility: From

the 1990s up to Today

The United Nations Conference on Environment and Development (UNCED), also

known as the Earth Summit in Rio de Janeiro in 1992 turned the focus of the
environmental debate to the sustainability and biological diversity related to the
industrial utilization of natural resources in the early 1990s (Hellström, 2001).
The environmental criticism led to the tightening of environmental norms and
later the legislation in Finland. Various industries were forced to invest in environ-
mental technologies (Harmaala and Jallinoja, 2012). Simultaneously with the
environmental techniques, the general production technological development
strengthened the productivity in addition to the decreasing environmental impacts
to land, water and air.
The industries recognized that proper governance of environmental issues is part
of their responsibility, which may even have positive economic consequences in
terms of better quality production, efficient use of inputs and capacity, as well as
good stakeholder relationships. The industries started to apply environmental
management systems, for example ISO 14001 (Juutinen & Steiner, 2010) and
related environmental management tools and reports. Environmental reporting
started to become a common practice in the 1990s. For example, a grocery chain,
Kesko and a pulp and paper producer, Stora Enso published their first reports in
1998 (Kesko, 2014; Stora Enso, 2014). The environmental reports were developed
into the form of more comprehensive responsibility or sustainability reports cov-
ering both environmental and social issues in the early 2000s. Among other Nordic
and Central European countries, Finland has been a forerunner both in qualitative
and quantitative terms of responsibility reporting (Kuisma & Temmes, 2011).
The debate returned to economic and social responsibilities in the early 2000s.
The first initiative in the post-modern context of corporate responsibility was taken
by Confederation of Finnish Industries (2009) by stating to its member industries
the business idea of “taking care of the values concerning the welfare on the
environment and people is a prerequisite for a success of the company as well as
for long-term profitability”. The Confederation printed also its first primer and
various promotional materials on CR which outlined the fundamental pillars and
requisites of a sustainable corporation.
Three phenomena, globalization, a crisis of the welfare state and some norm
hazards by a few large-scale companies, determined the relevance of corporate
responsibility for the industries. Globalization started already in the 1970s when the
pulp and paper sector purchased the first production units outside Europe, but the
intensive period of globalization was the phenomenon of the 1990s and onwards.
The large-scale industries expanded their operations to new, emerging markets.
Consequently, the globally operating industries were forced to consider the social
conditions of the host countries in addition to the norms of the home country. They
needed to take a stance on how they arrange the employee-related issues and
whether they need to provide wider social services, such as health care or leisure
Corporate Social Responsibility in Finland: From Local Movements to Global. . . 213

time activities, for their sent and local employees and their family members.
Commonly the companies were committed to arrange conditions that were compa-
rable with those in the production units in the home country.
Globalization led the expanding industries to the same questions which the
industry owners had met during the pre-war era when arranging social services
for their employees and surrounding societies in order to motivate people to work
efficiently. Especially, natural resource-based industries, such as pulp and paper
industries, have met the demands to provide larger social services to the employees,
as host-country operations are commonly located in peripheries, far away from
reasonable, public health care and education.
The Nordic welfare state provides equal services for all citizens, but its reverse
side is the relative high costs. The public sector has incurred debts in 2000s, which
sets its challenges to keep the current social service level and quality. This has
increased the pressure towards the private sector to participate more intensively in
the production of social services and take a more active role in maintaining the
societal issues. Related to this, the recent social debate has highlighted also the
responsibility of the private sector as an employer, both in terms of working
conditions and number of working places.
The debate around CR has been active since the beginning of 2000s also due to
legal offences, corruptions and high remunerations of high executives, even though
the general numbers of economic offences are reasonable and Finland has ranked
among the world’s least corrupted countries (Transparency International, 2014).

2.4 Academic Research and Debate Around CR

Regardless of the long roots of practices around social responsibility, the formal
academic debate and research around the concept is clearly younger following
much the corresponding development in other European countries. Tuomo Takala
was among the Finnish forerunner scholars when publishing his work “Discourse
on the social responsibility of the firm in Finland, 1930–1940 and 1972–1982” in
1989, but the majority of the research focused on environmental management in
1980s and 1990s reflecting the social debate around industrial environmental
impacts at the time.
The European debate among scholars and practitioners speeded up in the 1990s.
This was reflected in the academic research that boosted also in Finland in the early
2000s. From early 2000 onwards, academic research in Finland has also prolifer-
ated among universities and research institutes. As pointed out by Kourula (2010),
institutions with larger programs on CSR both in teaching and research include
Aalto University, Hanken School of Economics, Turku School of Economics,
University of Tampere and the University of Jyväskylä. Table 1 summarizes
some of the recent academic research works among Finnish universities. As
noted, research works around CR revolve around the themes: theoretical and
conceptual development, stakeholders’ perceptions on CR, ethics and responsibility
214 M. Mikkilä et al.

Table 1 Examples of research on corporate responsibility in Finland

Theme Author(s) Classification
Theoretical and conceptual Halme and Laurila Journal article
development (2009)
Ketola (2009, 2010a, Journal articles
2010b)
Mäkinen and Kourula Journal article
(2012)
Takala (1989) Journal article
Stakeholders’ perceptions on CSR in Juholin (2004) Journal article
Finland and other countries Kourula and Halme Journal article
(2008)
Panapanaan (2006) Doctoral dissertation (mono-
graph), incl. one journal art
Wang (2011) Doctoral dissertation, incl.
four journal articles
Ethics and responsibility within Hartman, Rubin, and Journal article
large-scale business Dhanda (2007)
Joutsenvirta (2011) Journal article
Lindfelt (2004) Doctoral dissertation
Lämsä et al. (2008) Journal article
Mattila (2005) Journal article
Mikkilä (2006) Doctoral dissertation, incl.
three journal articles
Mikkilä and Toppinen Journal article
(2008)
Strand (2009) Journal article
Toppinen, Li, Tuppura, Journal article
and Xiong (2012)
SME’s responsibility Hakala (2012) Bachelor thesis
Katila (2012) Bachelor thesis
Korpela (2010) Master thesis
Lähdesmäki (2005) Bachelor thesis
Nippala (2014) Master thesis

within large-scale business, and small- and medium-scale enterprises’

responsibility.
A few scholars had interest in the theoretical development of the corporate
responsibility concept. However, the recent responsibility research has much ful-
filled the needs of business focusing on stakeholders’ perceptions and the appli-
cation and adoption of the responsibility practices within large-scale, commonly
globally operating companies. This can be explained well because of the strong
linkage between the academic institutions and industries in Finland. On the other
side, few theses have dealt with the responsibility within SME business, and
probably very few journal articles have been published with this focus.
Corporate Social Responsibility in Finland: From Local Movements to Global. . . 215

In addition to universities, some special institutes and centers research and

promote corporate responsibility as a social and business issue. The focus of their
research, however, is more on policy analysis and business implications of CR in
the Finnish society. Leading organization is the Finnish Business and Policy Forum
which conducts or contracts out research on social issues and publishes the results
and analyses in the form of reports. Other organizations doing similar research
activities in the field of CR are the likes of Finnish Business and Society (FiBS) and
Central Chamber of Commerce (ICC).
Public debate around CR is relatively smooth in Finland, and although some
discourses are arising and getting seasonal attention, for example economic down-
turn, election and closure, open discussion or forum is a conventional and preferred
approach in the Finnish corporate world. The discussions about CSR have been
going on since the early 2000 and were a bit intensified by the European Commis-
sion’s Green Paper in 2001 (Hietanen, 2002). However, most of the discussions
have been steered by the Finnish Business and Society (FiBS) CSR Network, which
is a part of CSR Europe. Through FiBS, various social partners can actively join and
participate in the so called “ethical forum”, which promotes the development of CR
ideas and practices in Finland.
Accordingly, Hietanen (2002) pointed out that the main discussion agenda
pertaining to CR in Finland are the current linkages between the public and private
sectors because many perceived these sectors to be distant from each other despite
the various existing links, for example companies financing public services. Other
issues of discussion in the recent past are on the questions about mandatory CR
reporting of Finnish companies, CR practices of small companies that lack suffi-
cient resources or will, and various workplace issues, such as shortage of labor or
ageing workforce. Hietanen (2002) furthered that by way of addressing these issues,
the FiBS network plays a steering role in creating partnership between companies,
the public sectors, citizens and consumers in order to achieve socially and economi-
cally sustainable development in Finland. FiBS therefore seeks to find new per-
spectives, allowing companies by networking, to compare effectively their
experiences and share good practices.

3 Policy Initiatives that Promote Corporate Responsibility

The European Union has considered corporate social responsibility (CSR) as a

public policy issue ever since the publication of its 2001 Green Paper 7 and the
establishment of the European Multi-stakeholder Forum on CSR, defining CSR as
companies’ voluntarism to go beyond what the law requires to achieve social and
environmental objectives during the course of their daily business activities
(European Commission, 2014).
Regardless of the intensive responsibility debate in the society in the 2000s, the
documentation of the Finnish Parliament debates (Parliament of Finland, 2014)
indicated that there is no corresponding policy on corporate responsibility at the
216 M. Mikkilä et al.

national level unlike in the European Union. The main reason for this might be the
welfare state status and advanced social legislation that have created an adequate
framework guaranteeing minimum social services to the citizens and reasonable
business environment for the private sectors. Also the free-willing status of corpo-
rate responsibility as a set of actions that go beyond the legal obligations explained
the low number of policy initiatives during the last decade.
The first policy initiatives concerned the state role as a major shareholder and
related corporate governance of a few listed companies. The Parliament discussed
especially the role of the State in the cases that have led to social or environmental
problems. For example, the State owns shares of the two world’s largest pulp and
paper companies, namely Stora Enso and UPM-Kymmene, as well as the tele-
communication giant, Nokia. All these global actors closed several production units
in Finland owing to the low financial profitability incurred in 2000s. Simul-
taneously, new production units were established closer to the raw material sources
and markets, mainly in Asia and South America.
The Finnish Government joined the international responsibility mainstream in
June 2012 by launching its decision to support initiatives to strengthen international
norms and guidelines related to corporate responsibility. Furthermore, the Govern-
ment promised to promote the consideration of responsibility issues in the industry,
development and trade policy as well as in public purchases. The declaration aims
at making the Finnish business sector and the administration as forerunners in
dealing with responsibility issues (Ministry of Employment and the Economy,
2012).
Regardless of some social debates and environmental problems, the
non-governmental sector seems to trust in the legal framework in guaranteeing a
reasonable level of national business operations. Non-governmental organizations
focus mainly on the responsibility within international operations of the Finnish
companies. A few representatives listed tax avoidance, hiding behind subcontract
chains and the origin of raw materials as the most crucial themes of responsibility
debate and implementation (Yle, 2013). The Government declaration and official
initiatives to handle these challenges were considered inadequate.

4 Socio-economic Factors that Influence Corporate

Responsibility

4.1 Democratic Decision-Making

The long democratic history, welfare state status, wide freedom of speech and well-
established and functioning legislation and administration are the legal and social
cornerstones for the legitimacy of the Finnish business sector. Freedom of speech
and assembly has been the citizen’s rights from the beginning of independency for
Corporate Social Responsibility in Finland: From Local Movements to Global. . . 217

nearly a 100 years already. The rights set the basis for an active civic society, which
has been reflected throughout the history of corporate responsibility in Finland.

4.2 Limited Home Market

The public is still interested in the social and environmental consequences of

domestic operations, but the heightened internationalization and globalization in
the recent past decades have brought the global responsibility agenda to the scene.
The limited home market of a total of five million people together with highly
considered production costs boosted several direct or indirect international oper-
ations by the Finnish industries. For example, clothing and grocery industries like
Marimekko and Iittala have outsourced their production to the countries with lower
production costs. Large-scale pulp and paper industries have expanded closer to the
market and raw material sources. Recently, small and medium-scale business,
especially those operating with clean tech and new innovations, has become
interested in the business opportunities in the emerging market economies.
The specific character of the Finnish business is the participation of international
civic society and media in the responsibility debate. Some non-governmental
organizations (e.g. FinnWatch) monitor the operations of Finnish-based companies
and their counterparts outside Europe. The observed faults and misconducts are
oftentimes reported in the Finnish media. People’s trust in media in Finland is
considerably high compared to many other European countries.
Finnish companies have recognized the relevance of good media reputation to
their business operations both at home and in host countries. The large-scale
industries export a significant share of their products. Consequently, conscious
Central European customers and non-governmental organizations observe the pro-
duction processes of the products delivered to the European market. The Upper
Lapland case in the early 2000s was a case example of this where protection of
indigenous people (Samis), animals and forest ecosystems were blown up in the
media, when a pulp and paper company, Stora Enso, purchased round wood from
Metsähallitus (Finnish Forest and Park Services).
Greenpeace launched a campaign to inform the European paper consumers that
valuable indigenous forests were being logged, and the rights of indigenous Sami
people were being violated in the area, as the logging took place on the historical
winter pasture of reindeers. European consumers required the company to resolve
the conflict between its stakeholders, local reindeer herders, and Metsähallitus. The
company passed the decision over to the Finnish government. Finally it had to
decide not to purchase wood from the old, indigenous forests concerned, as to do so
would have been too great a risk to its reputation as an environmentally responsible
company (Yle, 2010).
Regardless of or in particular due to the active civic society and despite Finland’s
limited market, the country still provides a socially and politically stable operating
environment for the existing production units in the long-term. Obviously, the
218 M. Mikkilä et al.

active civic society together with well-established legislation creates the atmo-
sphere of trust in the society both from the citizens’ and business perspective.
This can explain the relatively marginal role of the Government in the official
corporate responsibility debate.

5 The Practice of Corporate Responsibility by Businesses

5.1 Focus Area

The Finnish business sector can be categorized into three types: export-oriented
large-scale industries, traditional or home-market operating small and medium-
scale enterprises (SME) and newly established SMEs based on the commercial-
ization of an innovative business idea. The financial, social and environmental
operating environments of these actors varies significantly from each other, leading
to various responsibility focuses.
A significant number of the large-scale industries was founded before the time of
the intensive corporate responsibility debate. Thus, these industries have grown
together with the debate, but nowadays applying globally applied forms of corpo-
rate responsibility practices. The companies have recognized that the application of
corporate responsibility is a useful tool to standardize the operations and strengthen
the communication with their stakeholders. The focus is more on the integration of
corporate responsibility in the existing operation—not that much on the adjustment
of the operation towards a new, responsible-business-idea based path.
The traditional SMEs may be the most hesitant towards corporate responsibility
among the business groups. The Finnish legislation sets a profound ground for the
business related social and environmental issues. When operating at the home
market, it is challenging to observe potential benefits of the wider responsibility
application compared to the additional costs and required time for the adjustment of
responsibility as a part of daily operations.
The business idea of the innovative SMEs rises often from the internalization of
responsibility and turning the issues of sustainable development into business
opportunities. This is manifested by their drive for innovations and approaches
such as clean technology, recycling, new renewable materials, etc. Thus, the focus
is on responsibility based value creation, which is often referred to as CR-driven
innovation.

5.2 Strategic Integration

Strategic integration can take place and be applied in the compliance with legisla-
tion and regulations, recognition and management of risks and strategic business
Corporate Social Responsibility in Finland: From Local Movements to Global. . . 219

opportunities (Juutinen & Steiner, 2010). By this strategic integration, the three
categories of businesses in Finland can be characterized accordingly.
The Finnish large-scale companies integrate corporate responsibility dimensions
in the operations through environmental and social management systems. The
application of the systems is typically accredited through international standards,
such as the ISO 14001 (environmental management systems), OHSAS 18001
(health and safety standard) and FSC (Forest Stewardship Council certificate).
The application of the management systems and other social and environmental
programs and initiatives have been observed as a part of annual report or as an
independent responsibility report.
Global Finnish companies have started to standardize their responsibility
reporting in the mid-2000s by adopting the Global Reporting Initiative (GRI)
reporting format (GRI 2014). The industrial sector started to adopt the GRI first
followed by the banking and insurance companies later in the 2000s (Harmaala &
Jallinoja, 2012).
The reporting practices vary significantly both in terms of quantity and quality.
A few non-governmental organizations, for example, the Service Centre for Devel-
opment Cooperation (KEPA, 2011) and Finnwatch (2011) promote the mandatory
corporate responsibility reporting in order to ensure the quality and transparency of
reporting. The Ministry of Employment and the Economy (2010) recognized also in
its recent study that corporate responsibility reporting is obligatory in the countries
like Denmark, France and the United Kingdom, but so far this has led no
corresponding actions at the governmental level in Finland.
For the time being, Finland follows the practice of the majority of the other
European Union countries in the voluntary corporate responsibility reporting. The
listed companies have the legal obligation to publish the financial key figures in the
annual report, but the Parliament has not initiated to enlarge the legal demand of
annual reporting to cover also a larger set of social and environmental indicators.
However, a significant share of the listed companies published this kind of infor-
mation already, especially when operating outside Finland. Corporate responsi-
bility reporting is a sort of risk management tool for many companies in the large,
socially and environmentally diverse operating environment.
In addition to the standardized reporting, the strategic integration requires
communication on daily operations on the companies’ homepages and readiness
for ad-hoc-type share of information related to possible social and environmental
problems. Relatively seldom companies report free-willingly problems that can be
classified as crimes according to the Finnish legislation, such as corruption, embezzle-
ment, sexual harassment or negligent homicide. They rather react on media
debate through their crises communication. Minor social and environmental problems
seem to be easier to announce spontaneously. Obviously, the companies count
that such a spontaneous communication strengthens their legitimacy in the society
while the silence can be a risk for the reputation. The criminal charges and official
processes are treated somehow beyond the local media debate, not as a direct tool to
strengthen legitimacy—even though honesty is considered one of the basic values of
the Finnish society.
220 M. Mikkilä et al.

Few large-scale companies have looked actively for opportunities in the stra-
tegic responsible business. The oil sector and pulp and paper industries integrated
functions in the 2000s in order to produce biofuel from national and abundant forest
biomass. However, the biofuel initiatives based on the imported palm oil have not
reached high acceptability and have not been considered responsible.
Several small and medium-scale enterprises have been established during the
last 10 years to create business based on recycling materials and nutrients,
establishment of virtual bank for marketing of recycling materials or looking for
new biomass sources for the bioenergy production. Along with this development,
few innovative SMEs with responsible business ideas have grown to truly large-
scale internationally operating companies, one of them being a top-design com-
pany, Globe Hope—an innovative company that designs and manufactures eco-
logical products from recycled and discarded materials (Globe Hope, 2014).

5.3 Difference Between SME and Large Businesses

5.3.1 Small and Medium-Scale Enterprises

The Federation of Finnish Enterprises counted over 322,000 enterprises in Finland

of which only 0.2 % or around 600 are classified as large-scale companies,
i.e. employing more than 250 people. Nearly 94 % are micro enterprises, employing
less than 10 people. The SMEs cover the sectors like fishery, agriculture and
forestry, trade, traffic, service industries and contract labor works (Federation of
Finish Enterprises, Finnvera Oyj, Ministry of Employment and the Economy,
2014). The SME sector is divided into two sectors: the traditional home-market
oriented enterprises and innovative, partly internationally oriented start-ups.
A few characters delineate the phenomenon of corporate responsibility within
small and medium scale enterprises: legislation, limited human and financial
resources and home market operations. The legislation provides a comprehensive
framework for the SMEs that is respected by the enterprise owners. The handling of
legal obligations may still be perceived an adequate way to demonstrate responsi-
bility within SMEs. Furthermore, the majority of the SMEs employ a limited
number of people whose main task is to work with the productive operations. The
SMEs may also have scarce financial resources to be allocated for support func-
tions, such as implementation and management of corporate responsibility man-
agement programs. Finally, the newest enterprise barometer indicates that the
industrial entrepreneurs are export oriented selling some 40 % of the production
in the international market while the majority of the remaining actors operate
mainly on the home market (Federation of Finish Enterprises, Finnvera Oyj,
Ministry of Employment and the Economy, 2014).
At the time of increasing corporate responsibility debate in the early 2000s,
the SMEs were not among the forerunners in launching corporate responsibility
programs, but the concept became more concrete by the 2010s. Corporate
Corporate Social Responsibility in Finland: From Local Movements to Global. . . 221

responsibility was often associated with the different kind of regulations and
restrictions set to business activities somewhere from above the businesses, and it
had somewhat negative tone for the entrepreneurs. Although small businesses may
be lacking the exact knowledge of the content and applicability of the concept of
corporate responsibility, their everyday business operations were viewed as respon-
sible (Lähdesmäki, 2005). Family-owned companies were more responsible in the
issues concerning employees, local operating area and environmental responsi-
bility. With this, small business owners were primarily focused on the steady
production processes and their legitimacy within the local societies (Katila, 2012).
The corporate responsibility management approaches of newly established start-
ups have not been analyzed systematically so far. Modern businesses are often
based, one way or another, on responsibility and new innovations. It can be
construed that these companies have integrated responsibility into their business
ideas and operations, even though they may not express it in the form of regular
reporting yet. Within all types of SMEs, corporate responsibility is perceived as part
of the business, even though its implementation may not yet be integrated very
concretely throughout the production chain. For example, social responsibility
reports are relatively rare so far.

5.3.2 Large-Scale Industries

Many of the large-scale companies operate globally; hence they need to apply a
wider set of social and environmental indicators in their daily operations compared
to the locally operating SMEs. For example, the questions of child labor or forced-
labor are irrelevant in the Finnish context due to the advanced social legislation, but
the companies face such issues in other countries particularly in the developing
countries (Panapanaan, 2006). The large-scale, export oriented industries have
developed their own management methods and principles to correspond with the
requirements of various host countries since the 1990s, as the national legislations
were commonly inappropriate compared to the international requirements
(Mikkilä, 2006).
The two business world extremities and cornerstones of the Finnish national
economy, natural resource- based industries and telecommunications have lived
through very different paths when adopting today’s corporate responsibility prac-
tices. The natural resource based industries, like mining or pulp and paper produc-
tion, are among the most criticized branches in Finland because of the visibility of
the operations, in that the exploitation and utilization of raw materials. Further-
more, the production plants of these industries are usually located at the close
proximities of communities where their industrial environmental impacts, like
effluents and emissions, are very concrete to the local populations.
Due to the importance to their reputation, the natural resource -based industries
started to adopt various social and environmental management systems and report
in the early phase of responsibility debate, even though this does not prove the
implementation of corporate responsibility in practice yet (Mikkilä & Toppinen,
222 M. Mikkilä et al.

2008). The general reputation and legitimacy of operations can even be a stronger
indicator of responsible operations than the reporting.
The telecommunication giant, Nokia Oyj, represents a branch with high legiti-
macy all over the world. During the active environmental debate, in the 1990s,
Nokia Oyj had good operation conditions. Its production plants were new, quiet and
clean delivering no emotional reaction by its local and international stakeholders.
In addition, Nokia’s acceptability rocketed in the mid-1990s when it was the
key-business actor pulling the Finnish economy from the extremely deep depres-
sion to the period of economic growth. The part of the modern image was to adjust
all modern managerial tools to the operations. Nokia’s first corporate responsibility
report was published in 2002 (Nokia, 2014). However, Nokia started to lose its
dominant position among the world’s leading mobile phone companies in the end of
the 2000s. Due to the tough competition and worldwide economic depression,
Nokia started to close its production units in Finland, which decreased its dream-
team reputation. The Nokia story ended in 2013 when the mobile operations were
sold to Microsoft.
These two cases demonstrate that the closer the industry interacts with the
surrounding societies, the more essential tool corporate responsibility is for suc-
cessful business operations. The industries with lower external pressure may see
corporate responsibility as a managerial tool, but its connections to long-term
profitability and competitiveness can be perceived to some extent invisible.

5.4 Drivers and Barriers of Corporate Responsibility

Their hesitation to address larger environmental and social duties of enterprises was
conspicuous among the representatives of both large industries and SMEs at the
early phase of the responsibility debate. The external pressure to improve environ-
mental management was seen to lead to higher managerial costs and time consum-
ing activities. The connection between the international pressure and financial
profitability became clear in the quickly changing operational environment when
the stakeholders, especially non-governmental organizations, arranged national and
international campaigns against large-scale industries. Nationally operating SMEs
have seldom been criticized due to their home-market operations within the
national legislation.
The establishment of new environmental and social management systems
required additional input, but its pay-off options have also been recognized recently
in terms of more efficient managerial and operational activities in the daily oper-
ations. The installed systems facilitate the employees’ daily work, as they can
follow the standardized practice. The standardization improves also the health
safety, especially in the production sector.
By the beginning of the 2010s, the standardization was widely understood as the
application of environmental and social management systems and regular reporting
within the large-scale business. Also, many SMEs have noticed the standardization
Corporate Social Responsibility in Finland: From Local Movements to Global. . . 223

as a managerial tool that can boost operations instead of meaning only extra costs.
Regardless of the existing models, the jungle of standards and measurement
instruments can still be a problem within SMEs, like the situation was 10 years
ago among the large-scale industries 10 years ago (Juholin, 2004).
It can be implied that the major barriers for corporate responsibility have
throughout its history been the attitudes within industries and the fear of increasing
costs. The same reasons motivate nowadays the companies to integrate corporate
responsibility in their strategies and operations; the moral value of the responsi-
bility to do the right things today and tomorrow and the opportunity to strengthen
the financial outcome through responsible operations.

6 Furtherance and Prospects of CR

In Finland, CR has some characteristics that make it distinct and differ from the
general view. The view is very much affected by the pattern of county’s develop-
ment and the formation of the welfare state. The recent development of CR is a
resurrection of the historical social responsibility, but with a new form and broader
and global scope. CR relates to the Finnish way of thinking that one should be
responsible and behave ethically in business. Although a normative statement, such
thinking is hinged on the Northern European high regard for ethics and good
morals. This is reflected in many references by Finnish managers claiming the
representatives of the company to act responsibly and behaving ethically in dealing
with their employees as well as other stakeholders and community around them
(Panapanaan, 2006). Based on this premise, it can be said that CR has come a long
way, to be established and accepted in the Finnish modern business and society.
Further development and prospect of CR is therefore seen in the increased impor-
tance and internalization of the CR issues in the activities of Finnish companies.
With the continuing enforcement of strict domestic regulations and external pres-
sures, for example from the European Union, Finnish companies are bound to be
more serious in dealing with their CR. On the other hand, the role of social
partnerships as steered by the FiBS networks is seen in the practical implementation
of CR in the everyday lives of companies. Because of the social networks and well-
functioning cooperation channels, CR in Finland is believed to progress more
effectively (Hietanen, 2002).
With established CR corporate frameworks, regulatory measures and social
networks, a three dimensional model of corporate responsibility has been insti-
tutionalized both in the public and private sectors by the second decade of the
2000s. In many cases, CR is adjusted to be a part of communication and reporting
activities, although its application in organizational strategies varies according to
the operational sector, business idea and size of business.
The CEO of one of the world’s largest pulp and paper companies,
UPM-Kymmene, summarized the key-elements of corporate responsibility in his
224 M. Mikkilä et al.

social network tweet: “risk management, dialogue, eco-design, competitive advan-

tage and environmental certificates”.
Research-wise, Halme and Laurila (2009) developed a model of business inte-
gration of corporate responsibility types and the potential for expected financial and
social benefits. Although, not specifically modelled with Finnish companies, such
generic model may do locate Finnish companies as they do their CR strategically.
The model outlines the three types of corporate responsibility: philanthropic CR,
CR Integration and CR Innovation. Philanthropy tends to be the least integrated
with the core business of the company, whereas the CR Integration and CR
Innovation approaches are more tightly interwoven with the core business Fig. 1.
Philanthropically oriented enterprises implement their responsibility, for exam-
ple by donating money for some socially or environmentally justified target. The
CR Integration refers to the management of environmental and social performance
of existing business operations by developing environmental management systems,
applying certificates for the operations and products and reporting on the environ-
mental and social performance. Various national and global social inequities and
environmental challenges led to the development of the CR Innovation model. The
target is to alleviate a social or environmental problem by turning the problem as a
new, innovative business idea.
The model adjusts well to conclude the development of corporate responsibility
and its future prospective in Finland. The industry owners practiced philanthropy
up to the Second World War by providing social services to the employees and their
families. Also the social CR Integration could be recognized during the pre-war era
when the trade unions pushed forward reasonable working conditions, such as the
8-h working day. However, the increased environmental awareness and consequent
tighter environmental and social norms and legislation made CR Integration a
common practice in terms of the application of various certificates and launching
of environmental and responsibility reports. CR Integration is becoming a part of

Fig. 1 CR in Finland
within the three level
framework. Adjusted
according to Halme and
Laurila (2009)
Corporate Social Responsibility in Finland: From Local Movements to Global. . . 225

business as usual, especially among large-scale industries, even though it is not a

strategic part of business planning yet.
Nowadays philanthropy is still a common way to show responsibility.
For example, cause-related marketing has become relatively popular among the
clothing stores. These enterprises promote some of their products by promising to
donate a share of the price of each sold unit to a certain charity destination.
The division between Philanthropy and CR Innovation can be sometimes
unclear. Some non-governmental organizations, like Finn Church Aid, promote
philanthropy of citizens and business enterprises in terms of donating a price of a
productive animal or a bag of agricultural crops for a person in a less developed
country. With the donation the local farmer can improve the living standard and
establish even a small scale business by selling eggs, dairy products or left-over
harvest in the local market (Finn Church Aid, 2014).
CR Innovation is not only a form of foreign aid, but such business is becoming
common in Finland, too. The Nordic welfare state model has been criticized for its
incapability to guarantee their citizens the basic services. Especially, the Govern-
ment is willing to cut off the social costs during the economic depression periods.
This has created space and demand for private social enterprises that can, for
example, provide services to senior citizens.
The environmentally innovative business ideas originate from the recognition of
limited natural resources and long-term consequences of various industrial environ-
mental impacts. For example, the operations of Biovakka (2014), which was
founded in 2002 by a group of south-western farmers, are based on the principle
of sustainable development. The company provides waste processing services for
the needs of industry, communities and agriculture and produces renewable energy
and safe recycled nutrients for various purposes.
The role of corporate responsibility as a managerial tool and basis of business
will strengthen further in the future. Both the large-scale business and SME sector
will continue integrating various responsible management systems, implementing
the philanthropic project and developing sustainable technologies and commercial-
izing responsible business ideas. Corporate responsibility in all its forms will
continue strengthening its role in business as usual both in the home country and
global operation environment.

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 Part III
Eastern and Central Europe

Croatia
Poland
Estonia
Bulgaria
Serbia
Slovenia
Lithuania
Romania
Corporate Social Responsibility in Croatia:
From Historical Development to Practice

Petra Eterović, Borna Jalšenjak, and Kristijan Krkač

1 Introduction

The nature of CSR in Croatia is somewhat confusing due various causes. There is a
discrepancy between how the concepts of CSR are understood and how they are
implemented. These discrepancies are related both to day-to-day business opera-
tions and strategic planning. Particular cases that often appear and are covered
mostly by the media, (much less by companies reporting on these cases, and only by
a few scientific papers) show that corporate social irresponsibility (CSI) is mostly
not revealed either by the companies which performed them or by the scientific
community or discussed by competing companies (see Debeljak, Krkač, & Bušljeta
Banks, 2011; Županov, 1998). The only three groups that discuss CSI cases are
journalists, various NGOs, and students (mostly of business schools and faculties of
economics while they are preparing their case studies within business ethics and/or
CSR courses).
One should be very cautious when estimating CSR of a business sector or of a
particular company over a longer period, etc. because a series of cases show that a
lot of companies are doing partial CSR and partial CSI at the same time. Most
typical of which is CSI in terms of violating labour contracts and employees’ rights,
as well as CSR in terms of various sponsorships and philanthropic activities (for
examples see: Haramija, 2012; Jergovski, Jalšenjak, & Krkač, 2012; Kauzlarić &
Krkač, 2012). Cases such as this should be taken into account if one wants to get the
complete picture about CSR in Croatia.
The purpose of this entry is to supply: short review of historical development of
CSR in Croatia (Sect. 2), a description of CSR at HEI’s in Croatia (Sect. 3), describe
and review major CSR initiatives (Sect. 4), a note on specific socio-economic

P. Eterović • B. Jalšenjak • K. Krkač (*)

Zagreb School of Economics and Management, Zagreb, Croatia
e-mail: [email protected]

© Springer International Publishing Switzerland 2015 231

S.O. Idowu et al. (eds.), Corporate Social Responsibility in Europe, CSR,
Sustainability, Ethics & Governance, DOI 10.1007/978-3-319-13566-3_13
232 P. Eterović et al.

factors contributing to the present state of CSR in Croatia (Sect. 5), and a short note
on CSR actual practices and common routines (Sect. 6).
CSR in Croatia will be described in previously mentioned way, manner, and
concerning the mentioned topics since its present state of the art and practices are
quite complex due to various historical factors most of which will be mentioned and
described hereafter.

2 Short Review of Historical Development of CSR

in Croatia

The development and research of CSR in Croatia can be categorized according to

historical periods starting from the Renaissance to the present day. The very
beginning of CSR can be recognized during the Renaissance. Second major period
can be sketched from the end of the WWI to the end of the twentieth century.
Finally, third such period ranges from 1991 to the present. Between those categories
it is possible to view the shift between purely individualistic philosophical research
in CSR during the Renaissance to more formalized activities related to CSR in a
modern period.

2.1 Renaissance and Modernity: Benedikt Kotruljevic´

and Nikola Vitov Gučetic´

It should be mentioned that the very idea of business ethics (henceforth abbreviated
as BE) and of CSR was identified and researched in the fifteenth century by
Croatian Renaissance philosopher, merchant, economist, scientist, and diplomat
from Dubrovnik Benedikt Kotruljević (1416–1469). Kotruljević in his book “On
Marketing and the Perfect Marketer” (“Della mercatura e del mercante perfetto”,
written in Italian, 1458) he established the description and principles of BE, and
defended the importance of BE for each core business (see Kotruljević, 1985/2005).
In his teaching Kotruljević emphasizes the list of a marketer’s virtues which make
the marketer perfect. A marketer should be dignified, prudent, trustworthy, upright,
hardworking, nimble, tricky, stable, respected, generous and calm, but before any
of these he should be righteous, just, and moderate (Kotruljević, 1985/2005,
pp. 188–200, for commentary see Brčić, 2009, pp. 139–143; Schiffler, 1996,
pp. 117–142). The following quotation is illustrative.
Justice, according to Augustine, consists in giving everybody what belongs to them. This
virtue includes many other things. Therefore, a marketer must always give everybody what
belongs to them, even if a marketer sees that other contract party was wrong on his own
expense, or that a text of the contract can be interpreted ambiguously on other’s expense.
When you are signing a contract you must demonstrate justice without thinking about it.”
(. . .) “A marketer must be just not only in money management, but also acting as a judge.
Corporate Social Responsibility in Croatia: From Historical Development to. . . 233

Marketers often serve as judges at commercial courts. . .” (. . .) “. . . and you must take care
only about the essence of the truth in question.” (. . .) “Since there are four ways in which a
human judgment can be perverted, you must safeguard against them and these are the
following: fear, greed, hatred, and bias. (Kotruljević, 1985, pp. 344–347, English transla-
tion from Croatian by authors)

In this conception stage of BE, Nikola Vitov Gučetić (1549–1610), another

Croatian philosopher and statesman from Dubrovnik, should also be mentioned.
His book “On Governing the Family” (originally in Italian “Governo della
famiglia”, 1589) explicitly deals with important BE topics. His book is in fact an
explicit economic thesis as it can be seen from the very title because economics
comes from the old Greek word oikonomia which means management of the
household (Gučetić, 1998).
From seventeenth to nineteenth century not so much was said and done
concerning CSR in Croatia. Contributions can be categorized as notes on employee
and employers duties, and virtues in parts of various books and textbook on general
ethics. The topic of CSR was not separately discussed outside of general ethical
issues, and outside of scope and limits of Catholic ethics. The last claim could seem
a bit historiographically inconsistent, i.e. to claim such thing; however, this is
consistent with the general development of Croatian philosophy and ethics through-
out these centuries.

2.2 From the End of WWI to the End of the Twentieth

Century: Catholic Church and Labour Unions

From the period 1918 to 1991, i.e. in the period of the Kingdom of Yugoslavia and
later Socialist Federal Republic of Yugoslavia, the major factors towards lack of
CSR were communist and socialist ideology as well as political and business
corruption. In that period topics in CSR and BE were mostly discussed by Croatian
ethicists and moral philosophers connected to the Catholic Church. It should be
pointed out that in the period from 1945 to 1989 only two institutions were
interested in particular issues of CSR and BE. They were labor unions and the
Catholic Church. However, the first were under the strict control of the Communist
party and the second was prohibited to influence the general public by means of
major media (mainstream newspapers and TV). In addition, both of these institu-
tions were mostly interested in BE and CSR concerning employees and didn’t take
any broader view on CSR. It was often mentioned in a series of Social Encyclical
Letters by Popes that the Catholic Church didn’t have an economic model to offer,
see Pope John Paul II (1991). Strangely enough, both labour unions and the
Catholic Church agreed on principles such as common good, solidarity, subsidiary,
and other so called principles of social ethics.
In short, communist legacy combined with the Croatian Homeland war (1991–
1995) slowed down all political and economic processes in Croatia and conse-
quently the process of introducing CSR as well and heavily influenced the context
in which CSR will be developed in the contemporary period.
234 P. Eterović et al.

2.3 CSR in Independent Croatia 1991–2013

Basically, the social teachings of the Catholic Church, and a series of courses
entitled “Social Ethics” or “Social teaching of Catholic Church”, etc. between
1991 and 2013 had a significant impact on the student population, government,
various associations, movements and initiatives that are engaged in promoting
CSR, and on a relevant part of the public in Croatia and influenced further
development of CSR (see Macan, 2002).
Notwithstanding the above, the real introduction of BE and CSR in Croatia
started with its renewed independence, especially after 1995. CSR was introduced
by all major institutions (educational institutions, various non-governmental asso-
ciations and societies, various protection societies, etc.) almost at the same time. On
the other hand, the government for political reasons and companies for profit
reasons, intentionally or not, misunderstood and sometimes also misused the
phenomenon and the concepts of BE and CSR. Many companies in this early period
just implemented CSR on their websites essentially advertising themselves as
moral, socially aware, and environmentally responsible private legal persons car-
rying activities for profits. In reality this was no more than window dressing.

3 CSR in Croatia at HEIs 1991–2013

HEIs in Croatia have all from their inception had courses on BE/CSR, some of them
obligatory at both undergraduate and graduate level (such as ZSEM, see www.
zsem.hr), some only at undergraduate level (such as VERN’, see www.vern.hr) and
some as an obligatory course at undergraduate and as an elective course at graduate
level (such as the Faculty of Economics and Business in Zagreb, see http://www.
efzg.unizg.hr).
So, for almost a decade now students, cannot graduate from business schools and
from some faculties of economics in Croatia without passing a course on BE and
CSR. This also nowadays stands for almost all business HEIs in Croatia. In
addition, there is an ongoing transfer of CSR knowledge, values, and experiences
from HEIs toward the business community and vice versa (through conjunct pro-
jects, implementations, executive education programs, and similar).
Concerning education, textbooks and introductions on BE and CSR in period
1996–2013 include the following (all in Croatian except Njavro & Krkač, 2006):
“Ethics in Market Relations” (Žitinski-Šoljić, 1996): “Honorably to Victory, Hand-
book for Socially Responsible Business” (Eterović, Kurešević, & Kocijan, 2003),
“Business Ethics and CSR” (Njavro & Krkač, 2006), “Introduction to Business
Ethics and CSR” (Krkač, 2007), “Business Ethics” (Bebek & Kolumbić, 2000),
“Business Ethics” (Žitinski, 2006), “Business Ethics and Multiculture” (Vujić,
Ivaniš, & Bojiš, 2012), and “Socially responsible business” (Jalšenjak & Krkač,
2012).
Corporate Social Responsibility in Croatia: From Historical Development to. . . 235

In addition, a series of conferences on CSR were held in Croatia and the

proceedings published on various topics in CSR and BE (see Aras, Crowther, &
Krkač, 2010; Beck & Koprek, 2009; Koprek, 2007, 2010, 2012, 2013; Njavro &
Krkač, 2006). Also, a series of research papers were published by Croatian scien-
tists working in the field of BE and CSR in notable international journals, encyclo-
paedias, companions, and conference proceedings (see Debeljak et al., 2011;
Debeljak, Koričan, Krkač, & Mušura, 2007; Debeljak & Krkač, 2008; Krkač,
2011, 2013a, 2013b; Krkač & Debeljak, 2006, 2008; Krkač, Kagin, & Mušura,
2005; Krkač, Martinović, & Buzar, 2012; Krkač, Mladić, & Buzar, 2012; Leko
Šimić & Štimac, 2010a, 2010b; Omazic & Vlahov, 2011; Županov, 1998).
Finally, from 2005 to 2010 a longitudinal research project on CSR was
conducted by a team from ZSEM (results were annually reported; see Matthews
Šulenta, Koričan, & Mušura, 2005a, 2005b; for other CSR researches in Croatia see
Bagić, Škrabalo, & Narančić, 2009). Each year around 40 publicly traded compa-
nies and others with “a public nature” (such as public utilities) were included in the
research. Companies’ websites and annual reports were checked for information
crucial to stakeholders and compared annually with previous data and also data
from other Central European countries. Although in this longitudinal survey Cro-
atian companies showed progress in the number and the quality of information they
were disclosing, still they compared less favourably with the other 10 countries of
Central Europe.
This more or less covers the development of CSR as an academic discipline and
a field of research in Croatia. However, the situation concerning implementation by
institutions under is not so encouraging to put it mildly, especially in recent years
due to the present economic crisis (2008–2013).

4 The Most Important CSR Initiatives Promoting,

Implementing, and Measuring CSR in Croatia

The most important initiatives and organizations which promote CSR in Croatia are
carried out by the companies themselves, by professional societies, by state agen-
cies, by civic societies and movements, and by HEIs.

4.1 Initiatives that Promote CSR

There is a number of CSR promoting initiatives worth of note in Croatia. Two stand
out for their scope and impact. Among the most important initiatives are the
following: from 2003: UNDP Croatia, Corporate Social Responsibility Program
(Eterović, Kurešević, & Kocijan, 2003); from 2005: Croatian Chamber of Economy
(HGK) which has a series of ethical codes for its members and reports on imple-
mentation (Vidošević, 2005); from 2011: Index DOP-a (CSR Index), Croatian
236 P. Eterović et al.

Chamber of Economy and Croatian Business Council for Sustainable Develop-

ment, DOP.HR, Project Socially Responsible Business in Croatia (Omazic &
Vlahov, 2011).
UNDP Croatia is the first CSR promoting initiative and it is implemented with the
collaboration of the Ministry of Economy, Labor and Entrepreneurship, and with
financial assistance of the Ministry of Foreign Affairs of the Kingdom of Norway.
UNDP Croatia principles are based on: The Universal Declaration of Human Rights,
ILO Declaration on Fundamental Principles and Rights at Work, Rio Declaration on
Environment and Development and United Nations Convention against Corruption.
UNDP Croatia stretches across following areas later operationalized in 10 different
standards: human rights, rights at work, environment and fighting corruption. In order
for companies to voluntarily include themselves in the initiative, the president or the
head of the company should address the president of United Nations and profess their
support of the CSR standards. By signing the contract the companies obligate them-
selves on abiding the standards, disseminating the information and submitting yearly
progress reports. At the moment UNDP Croatia website (http://www.drustvena-
odgovornost.undp.hr/show.jsp?page¼78003, accessed 18.05.2013) lists 80 companies
who are members of the initiative.
Croatian Chamber of Economy (HGK) is an organization which facilitates the so
called CSR Index (Croatian, indeks DOP-a). CSR Index is a methodology by which
companies in Croatia are rated according to doing business in a responsible way.
The methodology itself looks at six different categories in order to determine
companies CSR: Economic sustainability, incorporating CSR on a strategic level,
work environment, protection of the environment, market relations and relations
with local community. These areas are then incorporated in a questioner which
companies that choose to become a member have to fill out. At the moment the CSR
Index website (https://dop.hgk.hr/poduzeca/, accessed 18.05.2013) for 2013 lists
89 companies who have become members. Interesting to note is that a large number
of same companies are both members of UNDP Croatia initiative and CSR Index
initiative.
These initiatives are responsible for promoting, implementing, and collecting the
results of measurement of CSR by Croatian companies that voluntarily included
themselves in these programs. Being a member of such programs was, at the
beginning (1989–1996), an issue of these companies’ presentation towards public
and other stakeholders, but in time (1996–2012) it has become a serious and
important issue that contributes to their overall business success. Nowadays
(2013) it is common for leading Croatian companies to be included in at least
some CSR initiatives on a national and/or international level.

4.2 NGOs that Promote CSR

Number of non-governmental organizations that are engaged in protecting various

rights concerning CSR should also be mentioned since they implement and measure
Corporate Social Responsibility in Croatia: From Historical Development to. . . 237

various specific CSR and CSI elements. Among the most active are: UATUC
(Union of Autonomous Trade Unions of Croatia); Association Whistleblower;
Consumer, A Society for Consumer Protection; and a wide range of different
environmental societies, associations, and NGOs that act mostly locally and are
quite successful in promoting environmental protection.
Union of Autonomous Trade Unions of Croatia is an organization which protects
basic employee rights in almost all business sectors in Croatia. It affiliates 18 trade
unions from various sectors with the total of 110,000 members and additional
60,000 retired members. (http://www.sssh.hr/en/static/uatuc-1, accessed
05.18.2014) UATUC, probably the strongest trade union confederation in Croatia,
is heavily engaged in activities for the advancement of employee rights and is an
active participant in tripartite dialogue between employers, employees and the
government.
Association Whistleblower protects whistleblowers and related activities. It’s
the association founded by Vesna Balenović who was the first major whistleblower
in Croatia having exposed CSI activities in one of the biggest petroleum companies
in Croatia. The association deals with all whistleblowing cases in Croatia not
minding the sector or industry. From CSI activities by companies, to corruption
cases related to politics, the association works on protection of whistelblowers.
Consumer is an association that actively protects consumers. It is a civic,
unaffiliated NGO of citizens which aims to protect and enhance consumer rights.
Its activities stem from the principles laid out in the UN Guidelines for consumer
protection. And it is one of the NGOs that citizens can go to if their consumer rights
have been breached.

5 A Note on Specific Socio-Economic Factors Contributing

to the Present State of CSR in Croatia

Present state of CSR in Croatia is the result of many different factors. The historical
development has already been sketched in the previous parts of this entry. Besides
historical influence several factors are important. They are the following: socio
economic factors and specific market structures; the Roman Catholic Church;
unions; media; various associations; and especially civic societies. In the following
text only a few major socio-economic factors are mentioned here.
The first specific factor is the transition from a socialist to a free-market
economy. Experts dispute when it started, how it was conducted, and when it
ended (e.g. some say that it started before 1991, namely in late 1980s, when the
Yugoslav government allowed the state to do business with “private companies”
which had been used by communist officials to “remove” money from the state to
their private companies; others say that privatization during the early 1990s was
semi-legal, even criminal, but surely immoral at its core, etc.). Nonetheless, in the
1990s the economic system was changed, at least in a formal way. Another side of
238 P. Eterović et al.

that coin was that the shift in the economic system was not accompanied with the
shift in mentality of Croatian people. Namely, a market system was introduced but
the people’s mindset was still communist in its core with all the very well known
characteristics such as not putting enough emphasis on personal freedom and
corresponding duties. The subsequent cases of CSI can be easily traced back to
such situation.
The second specific factor that must be correlated with the first one is the
Homeland war (1991–1995) during which Croatia fought and won against the
Yugoslav army and Serbian paramilitaries in Croatia. During the war Croatia
managed to gain its independence but some of its parts were completely devastated.
Although the hostilities stopped in 1995, Croatia was not fully reintegrated as late
as 1998. The result of it all was that the war slowed the progress of Croatia (and
neighboring countries as well) in many relevant ways: economically, politically,
socially, culturally, etc.
The third socio-economic factor is the economic and social crisis in Croatia
(2008–2013) that has severely (but hopefully not irreversibly) damaged major
economic institutions, and whole business sectors. This crisis is important because
it has causes not just in the last US and EU crises but also in the domestic economic
crisis which is deeper due to the first and second factors and additionally due to very
high level of corruption (see Krkač, 2013a, pp. 213–222).
The fourth factor is a series of mutually close interdependent features, or
character traits (one could say virtues and vices), of Croatian managers, employees,
workers, buyers, customers, etc. Due to the principles and practices of the commu-
nist regime, especially economically speaking, specific professional responsibili-
ties, obligations, and even moral duties were generally neglected. Croatian
managers were used to the fact that some major business decisions were going to
be dictated by political elites, workers didn’t care much about how they performed
because they were heavily protected by laws, unions, and co-workers and it was
quite unlikely that they would lose their jobs due to unprofessional or morally
irresponsible conduct (however, they could lose it for political reasons and that
remains the case even nowadays), and buyers and customers didn’t care much about
their rights, and responsibilities, etc. This situation, or in fact business culture,
slightly changed when some more responsible foreign companies entered the
Croatian market. Although same companies were at times quite CSI; e.g. the
Karlovačka brewery that is owned by Heineken, or the HOTO Group involved in
the construction business in the center of Zagreb, see Debeljak et al., 2011, pp. 5–
22). However, responsible international companies doing business in Croatia raised
the level of CSR and indirectly influenced major Croatian companies. Therefore,
they have been an important factor in transforming the overall business culture in
Croatia for the better.
Corporate Social Responsibility in Croatia: From Historical Development to. . . 239

6 Practice of CSR

Practice of CSR by some Croatian companies, in terms of explicating various CSR

models and strategies (ranging from obvious deceptive CSR to real CSR strategi-
cally implemented and practiced on daily basis) can be described in different ways.
Here, it is appropriate to just sketch out the most common cases of CSI and thus
providing context for the reader.
Series of CSI cases still appear on a weekly basis in companies, regardless of
whether they are private or state-owned. The list of particular cases of CSI can be
arranged in the following groups of typical CSI activities according to the stake-
holder/CSI practice criteria. In a taxonomical manner they are: various violations of
free-market principles (by major players in almost all business sectors); corruption,
nepotism, and bureaucratization (by state agencies and state-owned companies);
various breaches of work contract (by all companies and especially contracts of
employees); violations of professional rules that concern core business professions;
violations of workplace safety and security standards; violations of customer rights;
and violations of environmental protection laws, regulations, and ethical standards
(for cases in marketing industry see Martinović, 2012).
However, some responsibility should be put on the side of citizens who don’t
display sufficient pressure on government, ministries, and local politicians to
improve their actions. And also, on the side of employees who often misuse their
work rights, don’t engage in professional advancement and violate rules of their
professions and on the side of buyers and customers who choose not to educate
themselves on their own rights and duties. This is where previously mentioned CSR
promoting initiatives can make a difference, in educating the population to be a
responsible consumer.

7 Concluding Remarks

In conclusion some remarks concerning all aforementioned groups and institutions

engaged in CSR can be supplied here. In the period from 1989 to 2013 CSR in
Croatia reached quite a developed stage. From its origins in terms of window-
dressing onto an understanding of the concept, principles, benefits to business and
application (from 1989 to 2003). Subsequently Croatian CSR reached almost
mature stages in terms of understanding strategic CSR, implementing, measuring,
and reporting CSR from 2004 to 2013. However, a fully mature stage of CSR still
hasn’t been reached due to many influential cases of CSI (in quantity and quality)
that appear on a weekly basis, no matter if comparatively speaking they appear
much less in the period 2004–2013 than in the previous period (1989–2003).
240 P. Eterović et al.

Based on some positive and some negative aspects of CRS in Croatia a few
suggestions can be made in terms of practical advice to all preparing for or actually
doing business in Croatia. Concerning business schools, faculties of economics and
management, and all other faculties and research institutes and similar, first of all a
series of high quality textbooks is still needed and of course high quality research
concerning the business sector. Also, establishing closer, more constant, and longer
connections between educational institutions and companies is still needed since
the lack of influence of scientific results of CSR research toward companies, and
sometimes business realities toward scientific research as well. Concerning the
Catholic Church and other religious institutions in Croatia (especially Islam,
Orthodox, and Reformed churches), and concerning labor unions, and various
agencies and NGOs that are doing CSR, closer connections with the business
community is also needed. Concerning various state agencies and business guilds,
chambers, societies and similar, the most important is that they show their results in
terms of influencing companies and perhaps to serve as a kind of glue between the
academic community and religious institutions, unions, and various NGOs on the
one hand, and companies and their associations on the other. Finally, concerning
companies, they should more consistently, and transparently measure and report
their CSR activities, and additionally their eventual CSI activities as well since this
can be to some degree counted as a real sign of completely authentic, integrated,
and on a daily basis, practiced CSR.
The following two elements of CSR for real improvement in Croatia seem to be
needed. Closer and much more relevant and measurable partnership and influence
between the academic community, various institutions and NGOs engaged in
promoting CSR, and media on the one hand, and the business community, compa-
nies, and various business bodies and guilds on the other. Much more critical and
objective reporting on CSI events and incidents by all groups is required. Since this
is no place for any kind of prediction or guesswork concerning the future, the
authors of the present text can express, especially in view of the economic crisis that
is ongoing in Croatia (2008–2013), some kind of hope that the present state of CSR
will be preserved in next 5 years, and perhaps become slightly improved especially
towards the research, measurement, and reporting on CSI.

Acknowledgement The Authors would like to thank Mr. Paul Norcross for proofreading the text
and to anonymous reviewer of our paper due to which the paper is of much higher quality.

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Corporate Social Responsibility in Poland:
From Theory to Practice

Tomasz Potocki

1 Introduction

In order to better understand the character of business culture and ethics in CEE
countries like Poland one should get to know historical, cultural, religious and legal
background as well as the profile of postcommunist economies and the level of their
socio-economic development. It seems to be particularly significant considering the
extension of EU and internationalization of trade, where business success depends
very often on understanding organizational culture, level of trust and business
ethics accepted in a given environment (the so called unwritten rules).
The following chapter contributes to “CSR in Europe” because it describes the
current level of development of Corporate Responsibility1 in Poland and focuses
mainly on theoretical and practical aspects influencing the growth of CR. It includes
comparative research and practical implications, and therefore may serve as rec-
ommendation for further research necessary to fill in the knowledge gap and solve
the most urgent problems that CR is facing. According to the approach adopted in
the world literature treating on CSR, the methodology and conclusions result from
the Author’s professional experience—as a consultant, entrepreneur and manager
(compare with Fassin, 2008). The research performed for the purpose of this paper
involved the analysis of the literature on CSR (Polish and international), Polish
legal acts, commercial and academic reports as well as personal interviews (in the
form of informal and formal discussions with numerous companies’ stakeholders)
The aim of the chapter is to answer the following questions:

1
Definition of Corporate Responsibility is broaden than Corporate Social Responsibility and
covers such issues as ecology, altruism, finances and key elements of the socio-economic situation
(compare with Crane et al., 2008; Egri & Ralston, 2008; O’Riordan et al. 2015).
T. Potocki (*)
University of Rzesz
ow, Rzesz

ow, Poland
e-mail: [email protected]

© Springer International Publishing Switzerland 2015 245

S.O. Idowu et al. (eds.), Corporate Social Responsibility in Europe, CSR,
Sustainability, Ethics & Governance, DOI 10.1007/978-3-319-13566-3_14
246 T. Potocki

• How did the systemic transformation change the way companies understand
CR?
• What is the role of social capital in creating ethical infrastructure?
• What are the most important measures undertaken in Poland within the last
20 years to support the creation of intellectual and material ethical
infrastructure?
• What is the current level of understanding CR in Poland and what are the most
significant elements of CR?
• What is the nature of main actions undertaken to develop CR in Poland?
The structure of this chapter follows the stated goals. First of all, the author
presents the role of systemic transformation in CR development. Then the attention
is directed to the role of social capital in building ethical infrastructure in Poland.
After that, the Author presents key milestones of creation of ethical infrastructure in
Poland as well as in understanding CR in the Polish reality. In the end, the chapter
discusses practical implications and the role of government in the process of
developing CR in Poland.

2 Transformation of Corporate and Social Responsibility

in Poland

When Poland has been undergoing transformation from the state-based to the
market-based economy, it was a country completely insensitive to social issues
and devoid of structures supporting corporate responsibility (see and compare with:
Dylus, 1997; Gasparski, 1994; Kozlowski, 1997). It resulted in the lack of business
ethics and ethical organizational culture. The Polish society strongly believed that
earning a living by running one’s own business activity had to be done at somebody
else’s expense (Maciuszek, 1999, p. 73). The polls from the year 1993 showed that
as much as 18 % of Polish respondents believed that the success of a company is
closely connected with criminal activity (Gasparski, 2007, pp. 147–148). At that
time no one applied any systems of effective and transparent management of
Human Resources and Organizational Development. The terms business and ethics
were understood completely different from the way they are perceived nowadays.
In that reality the concept of CR was not only unknown but also ridiculous for
people (compare with: Beaujolin, 2004). The whole situation resulted from the fact
that the economic transformation stimulated the desire for freedom and economic
independence, which was earlier stigmatized by the communist system, and there-
fore enhanced the competitiveness of companies on the free market (see broad
discussion in: Ger & Belk, 1996; Shen, 1991) by the introduction of the so called
wild capitalism (UNDP, 2007, p. 21). This process was initiated mainly by the
liberation from ethical rules and social morality, which was a negative phenomenon
(people behaved according to the principle: “Everything which is not forbidden is
allowed”). Such business habits had considerable managerial implications and one
could interpret the word ethical as being in accordance with law (see discussion in
Corporate Social Responsibility in Poland: From Theory to Practice 247

Paine, 1994). Moreover, businessmen’ awareness of the role played by external

stakeholders was extremely limited at that time (UNDP, 2007) and most interna-
tional reports showed that entrepreneurs believed that it was the government who
was responsible for social responsibility, not the private institutions (see and
compare with Mazurkiewicz, Crown, & Bartelli, 2005), and therefore they could
feel excused from taking care of Corporate Responsibility. This approach was
additionally accompanied with a myopic decision making and enhanced greed,
which reinforced this unethical behaviour pattern. It is worth mentioning that, as
indicated by Salomon, Poland adopted the so called model of abstract greed
(as cited in S
ojka, 1999, p. 337), which treats making considerable profit as a
main objective of business activity.
Unlike Corporate Responsibility, the ethical behavior standards for individual and
social choices have a long-established tradition.2 Social responsibility and traits such
as heroism, dignity, social justice and self-sacrifice were fundamental for the Soli-
darity Movement and social ethics (see analysis between Solidarity Movement and
CSR in: Preuss, Haunschild, & Matten, 2006). Beyer precisely defined social respon-
sibility saying that: “the ethic of solidarity was an ethic of hope, hope in the human
person and the reality of human freedom” (Beyer, 2007, p. 221). What is more, social
responsibility has been supported by the Christian religion—its role in the develop-
ment of business ethics in Poland may be well observed on the example of John Paul
II’s encyclicals (see: Jan Paweł, 1981, 1991) and their influence on Poles’ lives. It
results from the fact that Christianity treats moral responsibility and sense of life very
seriously. Therefore, people are supposed to meet requirements that are more
demanding than those coming from the law, because the law itself stops functioning
as the only prescriptive regulation affecting human relations. The responsibility for
future generations acquires an even greater significance, which, from the perspective
of homo economicus, is limited only to the earthly existence and not to the eternal
one mentioned by Christianity (Woźniak, 2012, p. 127). The correlation between the
religion and CR has solid foundations (see Senger, 1970), and considering the
religious tradition in Poland and its significant role in the country’s transformation,
it cannot be forgotten in the discussion on CR (see also: UNDP, 2007, p. 17). The
important role of religion has been also emphasized by Kneer, who says that the
biggest value of religion is, on the one hand, that it is long-lasting and it does not
change easily, whereas on the other hand, it serves as a factor dividing the society
(Kleer 2012, p. 114). It does not mean that the relationship between economic
development in Poland and Christian values cannot exist, because, as stated by
Woźniak, sustainable development may well serve as such an example, particularly
in the context of socio-economic cohesion (Woźniak, 2012, p. 144).
Moreover, religion ought to be mentioned at that point because people believing
in God declare themselves to feel happier than the ones who do not believe in God
(see research review in: Myers, 2008, pp. 324–338) and additionally they show
greater involvement in social issues (see recent research for Poland: Czapiński &
Panek, 2013; Przewłocka, 2011). The relationship between morality and happiness

2
More on that in the next part of the chapter.
248 T. Potocki

has been discussed in the Polish literature for many years (see Tatarkiewicz &
Smoczyński, 1989). Tatarkiewicz indicates that eudaimonic well-being is close to
moral life (see more in: Tatarkiewicz & Smoczyński, 1989, pp. 184–186).
Considering the above mentioned facts one can conclude that the post-
communist period was a time of ethical identity crisis and ethical dualism. On the
one hand there were no formal structures for Corporate Responsibility, on the other
there were sound moral principles for it. The existence of dual ethical systems led to
the conflict of norms and values accepted in private and business life (Gasparski,
2007, p. 94). The values promoted by the Solidarity Movement were completely
rejected in business activity, where the dominating norms were: utilitarianism,
materialism and selfishness. The economic objective of companies (i.e. profit
maximization), which was marginalized by the communist economy, acquired
greater significance and did not leave any space for social, ecological and corporate
responsibility. One should not forget, however, that very often the reduction of
social and cultural benefits was the only way to survive on the market (compare
with OECD, 1999) and at least to some extent it justified the activities of companies
in the early phase of economic transformation, when the country entered the
recession, which was responsible for the financial situation deterioration of com-
panies from the CEE region (compare with: Furrer et al., 2010, p. 391; Valentine,
Godkin, Cyrsonand, & Fleischman, 2006, p. 81). As Klimczak points out, it was the
recession which forced companies to apply the so called marginal morality, i.e. the
lack of ethical and economic sensitivity and responsibility of an individual for their
decisions (Klimczak 1999). Examples of such behavior have been mentioned in not
numerous comparative research studies on the perception of Corporate Responsi-
bility in Western and CEE countries. Furrer and others showed that the students and
managers from CEE countries (Poland not included) believed that economic
responsibility is the most important element of CR. This assumption has been
also proved by the research performed by Steurer and Konrad, who claimed that
the economic dimension is the most important part of Corporate Responsibility of
companies in CEE region (Steurer & Konrad, 2009, p. 30), and the Polish research,
according to which materialistic values are much more important for CEE countries
than for Western countries and therefore the former ones attach more significance to
the economic performance than to Corporate Responsibility (Gasparski, Lewicka-
Strzałecka, Rok, & Szulczewski, 2004, p. 12).
Owing to the economic transformation the economic system has been adjusted to
the market economy, however the changes of social, legal and political dimensions
have been left aside. Gasparski indicates that business ethics is an element of
culture whereas (Gasparski, 2007, p. 24). At the same time, system of values and
morality accepted by an individual affect the way they perceive business norms and
standards, and that is why “legal norms and rules of conduct should be deeply
rooted in the system of values of a given society” (Gasparski, 1999, p. 24). It is of an
even greater importance for countries undergoing transformation, where the eco-
nomic growth triggered systemic changes in all of the above mentioned aspects of
life (see discussion in: Inglehart & Welzel, 2005).
In the first years after the economic transformation the systemic changes in
politics, law and socio-economic situation were responsible for the appearance of
Corporate Social Responsibility in Poland: From Theory to Practice 249

culture shock (people who earlier did not have much influence on their lives were
suddenly forced to make decision concerning every sphere of their life) and ethical
confusion (see and compare with: Stachowski, 1999, p. 185). This ethical chaos
affected all three dimensions: individual (also referred to as basic, micro), institu-
tional (also referred to as central, mezzo) and systemic (also referred to as macro)
(compare with Gasparski, 2013, pp. 80–85). It was intensified by a drastically
decreasing level of socio-economic standard of living and increasing socio-
economic inequality (Woźniak, 2012; Woźniak i Jabłoński, 2011).
The issues of social inequality and poverty are crucial from the perspective of
Corporate Responsibility, because, as stated by Tarkowska, “values and assess-
ments concerning wealth and poverty undergo changes with time, sometimes even
radical ones. Nevertheless, they have always been accompanied with the relation-
ship between values, assessments and ethical judgments” (Tarkowska, 2013, p. 45).
After the economic transformation people associated poverty rather with external
factors, whereas now it has been identified with the internal ones (Ibidem, p. 49).
This syndrome seems fairly alarming considering the fact that the economic
inequalities, particularly the frustrating ones, are increasing (Woźniak, 2012;
Woźniak & Jabłoński, 2011) and the society is heading towards an increased social
stratification and corresponding reduction of social capital and social trust levels.
Therefore, the system modernization may not proceed without changes introduced
in cultural systems (Kleer, 2012, p. 111). It shows that there is a great need for
linking Corporate Responsibility with the reduction of poverty and inequality,
particularly from the perspective of countries currently undergoing transformation
or the ones which have recently experienced profound economic changes.
To conclude, although Poland has no longer been recognized as a transition
country, the problems concerning economic, social and cultural dimensions occur-
ring through the last several dozen years are still the reason for the lack of balance
between the economic and ethical spheres. Undoubtedly, the key role in existence
of this imbalance played the dictatorial political system of communist times, which
was based on such practices as suspicion, permanent intimidation of citizens and
omnipresent nepotism (Borkowski, 1999, s. 126). The Author of the Chapter is of
the opinion that CSR’s definition formulated by Friedman, according to which CSR
is all about profit maximization, has been taken too literally in Poland (compare
with: Friedman, 1996). As Blaug indicates, people ignore the fact that the economy
should pay attention to values it derives from (Blaug, 1995), especially in view of
the fact that Social Responsibility is embodied in economy and societies (compare
with: Fukuyama, 1995, 2000; Putnam, 1995, 2001; Sen, 1991, 1995, 1997). It seems
to be even more important if one takes seriously Arrow’s statement that a sense of
responsibility for others is an important factor in the survival of a society and the
social system (see more in: Arrow, 1974, pp. 23–26).
250 T. Potocki

3 Social Capital as a Prerequisite for Building Ethical

Infrastructure in Poland

The growth of social capital (as defined in National Development Strategy 2030,3
compare with Czapiński & Panek, 2013; Fukuyama, 2000; Putnam, 1995) is a huge
challenge for Poland, which has been taken on by National Development Strategy
2020 (GCSS/MoE, 2012). The distinctive features of the Polish state and Solidarity
Movement present in times of communism turned out to be current maladies
(compare with: Czapiński i Panek, 2013). The difficulty with tackling the problem
is increased by the fact that corruption and bribery were the intrinsic elements of
communism and systemic transformation. This situation has changed for the better
during the last decade and the evidence for that may be found in numerous reports
on the problem of corruption (see Transparency International Corruption Indexes).
This change has supported the development of Corporate Responsibility in Poland,
however, no data on the role of Corporate Responsibility in Polish companies has
been available yet, because the literature on the analysis of social capital is limited
mainly to the country or regional level, leaving aside the company level (Jones,
Nyland, Ch, & Pollitt, 2004, p. 2). Only a few papers (see i.e.: Campbell, 2007),
mainly these focusing on Western countries, describe the relationship between
institutional factors and CR behavior of companies.
One of the fundamental elements of social capital is trust. In times of substantial
economic uncertainty trust may serve as a tool used for its elimination and therefore
also reduction of transactional costs of business activity (more on that in: Sztompka
1999, 2007). Poland is paying “high tax on mistrust”, which is the consequence of
not having solid ethical structures (compare with Fukuyama, 1995; Helliwell, 2001;
Knack & Keefer, 1997; Putnam, 1995, 2001; Sztompka, 2000, 2007; Woolcock,
1998).
For generations every business activity run in Poland has been based on trust,
honesty and Social Responsibility. The current trend should be an attempt to restore
the previous balance, which has always been a fundamental norm in business ethics,
but unfortunately for sometime was displaced by values promoted by classical
economics and economic rationality. This balance was a characteristic feature of
the Polish prewar sociological and ethical thought (see more in: Tyburski, 1999,
2000), which was neglected in the communist system.
In case of Polish small and medium companies their infrastructure should be
based on social responsibility in the form of family traditions, Christian religion and
owners’ conduct, which would enable to reduce the tax on mistrust. In case of large
listed companies the ethical infrastructure should take the form of a set of rules,
norms or corporate governance practices imposed by external institutions,

3
Social capital is a potential developed by societies and individuals in the form of norms, values,
behavior patterns and institutions that serve as a basis for the creation of relations founded on trust,
cooperation, creativity and exchange of knowledge. Such relations allow to accomplish aims that
could not be achieved independently by individuals (GCSS/MoE, 2012, p. 130).
Corporate Social Responsibility in Poland: From Theory to Practice 251

regulatory- and supervisory organs or owner supervision bodies. Therefore, it

should be emphasized that the process of implementation of ethical structures in
large enterprises constitutes in adjusting to the requirements of market competition,
whereas in case of SMEs it takes the form of spontaneous and non-formalized
operations (Gasparski, 2013, p. 223). One could think that the popularization of
business ethics practices in SMEs is a less challenging process than in large
companies, particularly in view of the fact, as stated by Boulding, that one of the
institutions having a favourable effect on ethical infrastructure are the integrating
institutions such as home, family, church or school (as cited in Gasparski, 2007,
p. 150). Unfortunately, the reality proves the opposite and the difficulty is not only
connected with the implementation of the practices to one’s business, but also with
their development, i.e. “creating and gaining acceptance by all stakeholders of a
new framework for business ethics” (Puffer & McCarthy, 2008, p. 301).
Other key elements of social capital are social and civic activities manifested in
the form of voluntary work. One could observe in Poland signs of pointless and
ineffective cooperation, proved by some research on Poles’ commitment to social
activities (Przewłocka, 2011, p. 12). The truth is that not much more than one third
of Poles is of the opinion that NGOs solve major social problems in their region,
whereas half of the respondents is convinced that very often it is connected with
serious malfeasance and self-interest (Przewłocka, 2011, p. 19).
According to the report—Volunteering in the European Union, Poland is among
the countries with a low percentage of people participating in voluntary activities
and small share of volunteering in GDP. Nevertheless, it is one of the countries
which show an increasing trend of involvement in social activities (GHK, 2010,
pp. 8, 11). The Polish law covers the definition of volunteerism (see: The Chancel-
lery of the Prime Minister 2003), which is not a common phenomenon, particularly
in post-communist countries. It should be emphasized that voluntary services
practically did not exist in communism, therefore the fact that Poland (13.2 %) is
ranked near countries like Ireland (16.4 %), Belgium (14.5 %) or Spain (12–13 %)
should be considered positive, but it is still a far cry from volunteering top leaders,
such as the Netherlands (42 %) Austria (43.8 %) Great Britain (44 %) or Germany
(36 %) (GHK, 2010, pp. 59–63). The numbers discussed above are similar to the
results Poland obtained in other research—Eurobarometer (16 %) and European
Values Study (12 %)—what places it fourth and third from the end among other EU
countries (GHK, 2011, pp. 63, 65).
One can observe a shortage of volunteers from the oldest age groups, which is a
contradictory tendency in comparison with developed countries, and also the
phenomenon that mainly educated people engage in voluntary work (GHK, 2010,
pp. 68, 73, 74). Nonetheless, these situations may be explained by the fact that
many people in Poland are committed to helping their children and raising
grandchildren, or are forced to earn extra money to supplement their pensions,
which, in comparison to other European countries, are fairly low.
The research carried out by Social Diagnosis (26,170 respondents) delivered
surprising results, according to which the involvement of Poles in NGOs’ activities
stays on the same level within the space of the last 10 years (in 2013 it amounted to
252 T. Potocki

13.7 % of the population). CBOS provided similar research results for Poland—
20 % of Poles do voluntary work (CBOS as cited in GHK, 2011, p. 3). The level of
commitment and the type of voluntary work is highly correlated with educational
level, and the lower it gets, the greater passivity among respondents (Czapiński &
Panek, 2013, pp. 292–293).
Another research on social commitment in Poland conducted by Klon/Jawor
Association again supports the previously obtained results (the Authors of the
research had access to three databases). They proved that 16 % of respondents
devoted their time to voluntary work in 2010. Unfortunately, only 1 in 20 people
spent at least 3 h a week on this activity (Przewłocka, 2011, p. 13). This study
proves that church plays an influential role in social commitment because 1 in
10 people from this group was involved in some church or religious organisation
and the indicator was twice as high for rural areas (15 % as opposed to 7–8 %).
There is also another research focused on corporate volunteering. It shows that
the group of people involved in corporate volunteering consists of: mid-level
managers, married but childless people (the research from 2012 shows mainly
people with children), more often women than men, in the 30–40 age bracket
(I All-Poland study on corporate volunteering 2009, p. 11, II All-Poland study on
corporate volunteering 2012, p. 24). The drawback of the research is that it takes
into consideration only employees from large companies and a very small repre-
sentative sample (only 145 persons in the first research and 201 in the second).
As pointed out by Angermann, a significant shortcoming of the research on
volunteering is the lack of uniform picture of volunteering behavior in the EU and
only a limited possibility to empirically compare the data from different sources
(Angermann, 2011, p. 3). This objection concerns also Poland, where the database
is limited to fragmentary poll results (except for Social Diagnosis longitudinal
database).
In conclusion, more and more people in Poland realize the necessity to build
social capital and appreciate its role in socio-economic development (see GCSS/
MoE, 2012). Nevertheless, as the above mentioned studies show, this fact does not
translate into an increased trust, commitment to social activities or development of
social networks triggering the economy. The growth of social capital must meet
social awareness and cannot be implemented by the top-down approach. It is of
particular importance because, as proved by the research performed by Bucar, Glas
and Hisrich, there are considerable differences in perception of business ethics not
only between the transition and developed countries, but also between the transition
countries themselves (here Slovenia and Russia, Poland not included) (Bucar, Glas,
& Hisrich, 2003, pp. 272–279). A fundamental role in the promotion of business
ethics in transition economics are going to play “the level of development and
stability of social institutions” (Bucar et al., 2003, p. 279) and the level of trust
(S
ojka, 1999, p. 231). It is of great significance from the perspective of ethical
infrastructure, both the intellectual and material ones.
Corporate Social Responsibility in Poland: From Theory to Practice 253

4 Intellectual and Material Ethical Infrastructure

in Poland: History and Perspectives

The ethical infrastructure has been created in Poland and so far it mainly takes two
forms—the intellectual and material one (Gasparski, 2013, p. 231). As stated by the
Author in the previous section, the growth of social capital plays the principal role
in the dynamic of its development.
The history of intellectual ethical infrastructure in Poland is mainly connected
with humanities and sociology. Gasparski claims that there is an intellectual
tradition of practical philosophy in Poland (for praxeology see Kotarbiński, 1990)
and moreover one can observe a deeply ingrained knowledge of morality supported
by the Christian religion (Gasparski, 1999, p. 34, see more in Karczewski, 2013;
Hoł
owka, 2001; Filek, 2002). Both these sources should serve as the basis for
interdisciplinary research and teaching of business ethics in Poland (Gasparski,
2007, p. 27).
As stated by Tyburski the tradition of business ethics dates back to medieval
times (works by Mateusz from Krak
ow, Mikołaj Kopernik and Stanisław
Skabimierz), the Renaissance (works by Andrzej Frycz Modrzewski, Piotr Skarga
or Andrzej Fredro) and also to the Enlightenment with works written by outstanding
personalities from that time, such as: Hugo Kołła˛taj, Jan Śniadecki, Stanisław
Konarski or Stanisław Staszic (Tyburski & Wiśniewski, 2013, pp. 366–394, see
more in: Tyburski, 1999, 2000).
In the second half of the nineteenth century and the beginning of twentieth
century one could encounter numerous eminent names, like Leopold Kronegerg,
Hipolit Cegielski, Julian R
ożycki, Karol Stefan Habsburg or Adam Stadnicki, who
combined successful careers with professional ethics (see more in: Jasiński, 2012,
pp. 283–287). In the postwar times these traditions were replaced by the Marxist
ideas, which did not contribute to the promotion of business ethics in Poland, just
the opposite—they stopped it. It was only when the systemic transformation came
that the tendency reversed once again and business ethics became a subject of
scientific and practical discussion in Poland.
According to Gasparski, the VI Polish Philosophical Convention that took place
in the year 1995 had a crucial role in the development and institutionalization of
business ethics in Poland (this convention was a continuation of conventions
initiated in the 1820s in Lviv). During this convention a Philosophy and Ethics
section was created (Gasparski, 2007, p. 13), which showed that business ethics was
recognized as the subdiscipline of applied ethics (Gasparski, 2013, p. 85). More-
over, it needs to be emphasized that in 1994 the Research team on Business Ethics
and the All-Poland Seminar on Ethics in Business, Economy and Management were
organized. The Centre for Business Ethics started functioning in 1999 and in the
year 2000 the first NGO was established—Responsible Business Forum, which
focused its activity on CSR. Another important organization was the Polish Asso-
ciation of Business Ethics formed in 2001 (Gasparski, 2013, p. 86).
254 T. Potocki

The material ethical infrastructure may have two main scopes: the objective and
subjective one. The basic document for the material infrastructure of an objective
nature is the Polish Constitution (particularly the first two chapters) (Sejm RP,
1997, art. 5, 30, 31, 76). According to the Author of the following Chapter, it has
also its reflection in the Act on Freedom of Business Activity from 2004 (art.
17, 18), which, as Gasparski holds, was written according to the idea: “Everything
which is not forbidden is allowed” (Gasparski, 2013, p. 221). As Bernatt aptly
states: “the entrepreneurs (. . .) are the social participants of economic processes,
(. . .) social partners (. . .), and the adoption of social market economy allows people
to assume that the entrepreneurs should act according to such values as: solidarity,
dialogue and cooperation with entities influenced by their activity” (Bernatt, 2011,
p. 33).4 The regulations, which allow a very broad interpretation, may favour the
overuse of law for your own benefits and shifting the responsibility on to a State.
Poland has been and still is (although to a lesser extent) an example of such
situation.
The additional regulations, but mainly concerning non-profit organizations,
come from the Act on Social Assistance and the Act on Employment Promotion
and Labour Market Institutions from 2004 (currently being amended: see: The
Chancellery of the Prime Minister 2014). As mentioned above, they refer to the
NGOs’ sector, whose role in Poland is rather insignificant in comparison to other
EU countries. Responsible Business Forum, CSRInfo.pl, Volunteer Centre Associ-
ation, The National Chamber of Commerce, The Polish Confederation of Private
Employers Lewiatan, the Foundation of Social Communication, the Partnership for
Environment Foundation and the Academy for Philanthropy Development are one
of the few examples of active Polish organizations. As one can see, there is a
burning need for the reinforcement and development of this sector, so that it could
support the socially responsible activities and become a more reliable and signif-
icant partner in this area. One of the first steps in this direction is signing the
cooperation agreement on the creation of a platform for activities supporting
sustainable development in Poland between the Ministry of Economy, the Respon-
sible Business Forum and World Business Council for Sustainable Development
(WBCSD).
Demand for the creation of ethical infrastructure in Poland resulted within the
last 10 years in formulation of various codes, including: code for listed companies
(Code of Best Practices for WSE Listed Companies), code for financial institutions
(The Canon of Good Practices of Financial Market), code for banks (Good Banking
Practices for enterprises (Ethical Entrepreneur’s Code), in which Gasparski
expands entrepreneurs’ responsibility by stating that “it is illegal to (. . .) run
business activity that threatens public morality” (Gasparski, 2007, p. 534), code
for universities (The Code of Good Practices in Universities), code for the meeting
of business and public administration (Public Integrity conducted by The Stefan
Batory Foundation) (based on Gasparski, 2013, pp. 217–231, see more examples in

4
Author’s translation from Polish.
Corporate Social Responsibility in Poland: From Theory to Practice 255

Gasparski, 2007, pp. 278–281). It proves that Poland has already transferred from
the declaration phase to action phase. Even if these activities are only fragmentary
they may be recognized as a strategic milestone in taking a holistic approach to
building of the ethical infrastructure.
The activities supporting the objective scope of ethical infrastructure are
supplemented by activities of the subjective scope. A crucial role play here inter-
national organizations, i.e. the International Business Leaders Forum, United
Nations Development Programme (UNDP) and the World Bank, which promote
projects implemented mainly by NGOs (see more in: UNDP, 2007, pp. 26–27).
Public administration has a vital part in the whole process. The government is
responsible for institutional transfer of CSR ideas, practices, promotion and soft
polices. The foundations for an increased commitment in CSR’s promotion and
development in Poland were laid in 2009 (the activities performed by the Office of
Competition and Consumer Protection, Central Anti-Corruption Bureau and the
Ministry of the Environment and projects: State Ecological Policy and Sustainable
Production and Consumption Patterns). The Ministry of Economics appointed a
CSR Team, which deals with producing recommendations, promoting good prac-
tices and entering into a dialogue with the key stakeholders. The CSR Team
includes the following groups:
• Working Group on CSR Promotion System in Poland
• Working Group on Socially Responsible Investment
• Working Group on CSR and Education
• Working Group on CSR Sustainable Consumption
The above mentioned organizations determine the main trends in CSR develop-
ment in Poland. According to the report, the conclusions from the groups’ sessions
have been taken into consideration in the guidelines of the National Development
Strategy 2020 (Ministry of Economy of the Republic of Poland, 2011, p. 10).
Nevertheless, as indicated by the report issued by the team appointed in 2012,
the government acts mainly as a patron: “one may identify organs of government
administration which take initiatives aimed at CSR promotion; however, there is no
leader that would coordinate them. Moreover, the advisory bodies and institutions
promoting CSR are being appointed” (Ministry of Economy of the Republic of
Poland, 2011, p. 6). In the Author’s opinion, the fact that there is no leader means
that no one can take responsibility for the institutional activities, which delays the
already belated public administration’s involvement in CSR practices.
The activities aimed at the development of material ethical infrastructure of a
subjective nature are supported by the Warsaw Stock Exchange—not only in
the form of codes adoption but also establishing in 2009 the Respect Index,
which is the first index of companies respecting CSR rules in CEE region (see:
http://www.odpowiedzialni.gpw.pl/, chapter “Corporate Social Responsibility in
Poland: From the Perspective of Listed Companies”). Each company willing to
participate in the index is supposed to meet the requirements included in the Code
of Best Practices for WSE Listed Companies, i.e. ESG area. Moreover, it has to
undergo a three-step verification and audit performed by a partnering company
Deloitte. Participation in the project is voluntary. The companies included in the
256 T. Potocki

index are mainly large companies, which take the leading positions in their sector.
Despite the growth dynamics which substantially exceeded the rate of return on
WSE index in years 2009–2013 (compare with Sroka, 2013, pp. 49–51), it seems
that there is still time for their assessment, particularly in view of the fact that, as the
research performed by SEG, GES and Credo Business Consulting on 865 WSE
listed companies show that 711 companies do not publish any information on
ecological responsibility and 793 on social responsibility (Ibidem, p. 12).
According to the report’s concluding part, “because of the lack of requirements
for the environmental protection and social issues, and also lack of interest among
Polish investors in sustainable development this subject is not an area of interest for
Polish listed companies” (Sroka, 2013, p. 43). This phenomenon is proved by the
tendency that has been lasting for the last several years, where the companies do not
show any interest in implementing CSR practices (see The Gdansk Institute for
Market Economics, 2003). Partial explanation to this situation is shown by the data
provided by Deloitte, which indicate that almost 70 % of the questioned financial
market participants do not take into consideration the ESG indicators when
assessing company’s investment opportunity, although they believe that their role
will increase (Deloitte, 2011, p. 4).
Therefore, there is a clear indicator that there exists a necessity for the introduc-
tion of Corporate Responsibility rules and education programmes for investors.
What is more, the legislative issues concerning the disclosure of ESG data need
serious attention (Sroka indicates that an appropriate bill has been introduced by the
Polish Accounting Standards Committee (Ibidem, p. 52).
Another significant role that the Respect Index may have is the SRI benchmark
for SRI investments in Poland. Unfortunately, the SRI market barely exists in
Poland (compare with Sroka, 2011). The situation will not change much unless
appropriate legal regulations are introduced that would force pension funds to
disclose the ESG data, requirements and standards concerning ESG reporting by
WSE are specified and participants of financial market are appropriately educated
(compare with Sroka, 2011, p. 21).
To sum up, the intellectual ethical infrastructure has a long tradition in Poland
and the last 20 years enabled to make up for lost time from the communist period. A
significant role in this process plays a group of people gathered around Gasparski,
whose contribution to the new peak development of business ethics and corporate
responsibility is undeniable.
The material ethical infrastructure of a subjective and objective nature in Poland
is way behind the intellectual infrastructure. A key institution responsible for
improving this situation should be the public administration. Unfortunately, the
public administration acting as a patron and promoter of CSR and the state-owned
companies in many occasions are not set a good example of CS actions. The Author
of the following Chapter believes that it will be very difficult to introduce any
institutional changes unless the subjects responsible for them gain ethical recogni-
tion and trust among the society. The ideal situation would be that the ethical norms
took the form of legal regulations and an ethical ideal was defined, which is very
difficult because there is a deficit of exemplary businessmen on the Polish political
Corporate Social Responsibility in Poland: From Theory to Practice 257

arena. Without any doubts, John Paul II and Stefan Wyszyński were the ethical role
models in communist times, whereas now the Polish society lacks such figures.

5 Current Understanding of Corporate Responsibility

The definition of business ethics proposed by Gasparski includes the so called 3E—
efficiency, cost-effectiveness and ethics—which function as values dependent on
each other and present the unlimited axiological context (Gasparski, 1999, p. 7).
Additionally, Rok proposed a similar approach, by expressing the CSR definition in
terms of three dimensions: economic, environmental and ethical (Rok, 2013,
p. 423). Nevertheless, the first definition gained wide recognition among Polish
academic environment and it is very often quoted in papers treating on CSR (see
examples: Adamczyk, 2009; Bartkowiak, 2011; Paliwoda-Matilańska, 2009;
Rybak, 2004). Its formulation initiated a deepened interest in CSR among economy,
financial and management scholars. The UNDP analysis proves the above stated
fact and defined the following periods in CSR development (choosing the year 1997
as the beginning of CSR history in Poland)
• Silence and Complete Lack of Interest Phase (1997–2000),
• Aversion and Objection Phase (2000–2002),
• Phase of expression of interest and public declarations (2002–2004),
• Phase of real though fragmentary activities (2004–2005),
• Strategic Activities Phase (2006—up till now) (UNDP, 2007, p. 22).
As presented above, the most crucial projects and activities promoting the
development of CSR in Poland have been performed for the last 10 years (the
fourth and fifth phase). The management literature has still been using the definition
of corporate social responsibility, although it seems that its context is too narrow.
Therefore, one may encounter in the western literature a term Corporate Respon-
sibility more and more often (a problem pointed out by Gasparski et al., 2004)—it
covers such issues as ecology, altruism, finances and key elements of the socio-
economic situation (compare with Crane, McWilliams, Matten, Moon, & Siegel,
2008; Egri & Ralston, 2008; O’Riordan, Heinemann, & Żmuda, 2015). These
conclusions have also been proved by comparative studies (in this article the
Polish-German ones), which show that “just after the transformation the social
functions (. . .) were perceived as obstacles that stood in the way to making profits
and that is why companies and some people started to treat them in a different
way”5 [Author’s comment: The Authors of that report mean CSR] (. . .) The terms
“interests of society” or “sustainable development” cropping up in the literature on
CSR may have negative connotations” (Bechert & Gorynia-Pfeffer, 2008, p. 10).

5
Author’s translation from Polish.
258 T. Potocki

What is important, using the term Corporate Responsibility instead of Social

Corporate Responsibility may help to challenge the stereotypes.
When looking at the Corporate Social Responsibility Pyramid proposed by
Carroll (see Carroll, 1979, 1999) one has the impression that after more than
20 years from the transformation Polish companies, in particular SMEs, have still
been struggling to enter the third phase, not to mention the fourth one, which is
reached only rarely by some companies’ owners. According to Ellington’s termi-
nology, this approach means the concentration on the profit from the perspective of
a triple bottom line (see Ellington, 1997). Thus it seems that the managerial
practices have more in common with the instrumental and private wealth creating
models (terminology used by Garriga and Mele (Garriga & Mele, 2004).
The above stated facts have been confirmed in surveys, which show that the
social commitment declared by large companies in 2010 takes in most cases the
form of financial and material support (GoodBrand & RBF, 2010). Another impor-
tant thing is the fact that large companies have no information on CR put on their
web sites and even if they have, it is mainly focused on sponsorship (see research
for largest Polish companies in: Mielechow & Piskalski, 2009, pp. 50–59). CSR.PL
and DNV provide additional evidence by presenting the research, according to
which, 75 % of 120 largest analyzed companies have sections dedicated to CSR or
ecological responsibility, however, they are extremely vague and refer mainly to
ecological responsibility (Krzemień & Piskalski, 2012). The research indicating an
increasing CSR awareness among large companies may give a distorted picture of
the market (compare with: RBF 2005-2012, GoodBrand & RBF 2010), particularly
in view of the fact that most reports on case studies in Poland (compare with: RBF
2005-2012) present the situation in large international companies,6 with only few
exceptions from the SMEs sector.7 The research conducted by PARP clearly
indicates that the CSR awareness increases in direct proportion to company’s size
(PARP, 2012, p. 3). Other research did not prove this correlation (Nikodemska-
Wołowik, 2011, pp. 52–53), but on the other hand it showed that 57 % of 251 SMEs
is familiar with the term CSR (Ibidem, p. 51). Nonetheless, the explanation for that
could be the fact that people perceive CSR in a subjective way and associate it with
“ethics of conduct, understood as responsibility for your decisions and activities,
reliability, honesty and morality” (Ibidem, p. 52). It allows us to make a deduction
that SMEs may perceive CSR as closer to moral standards than to systemic
approach typical for business ethics. According to the reports performed by
UNIDO, there are four main reasons why companies do not engage in CSR
practices—lack of time, financial means, knowledge and direct benefits (see
Luetkenhors, 2004). Because of that, as indicated by Bartkowiak’s own research,
no SME company included CSR regulations in their mission (Bartkowiak, 2011,

6
For CSR best practices for SMEs see: RBF reports (2005, 2006, 2007, 2008, 2009, 2010, 2011a,
2011b, 2012).
7
For CSR best practices see: UNDP (2007), RBF reports (2005, 2006, 2007, 2008, 2009, 2010,
2011a, 2011b, 2012), Respect index list and GRI reports database at csrinfo.org.
Corporate Social Responsibility in Poland: From Theory to Practice 259

p. 81). Moreover, the respondents admitted that the only motivation for engaging in
CSR activities were tax relieves (Ibidem, p. 82), which is another evidence for the
fact that SMEs perceive CSR as another source of financial burden.
The level of CR awareness presented by the largest companies from the CEE
region (Poland included) has been described in reports published by GRI. Steurer
and Konrad indicate that only 6 out of 700 largest companies made their reports
available for the general public (Steurer & Konrad, 2009, p. 26). The analysis of the
available reports, as indicated by Fifka, is one of the research methods used to
evaluate the level of CR development in a country (see Fifka, 2013, for Ecological
Rationality see: Kroneberg & Bergier, 2012). It may result from the fact that the
Environment Protection Law was introduced in 2011, which paternalistically
encouraged companies to implement ISO14000 and EMAS standards. Unfortu-
nately, despite a growing trend in Europe of reporting to the general public the
information on CSR (compare with Martinuzzi, Krumay, & Pisano, 2011, pp. 10–
11), Poland still stays behind because this issue has just recently arisen interest
among the largest companies. The only way to accelerate this process is to intro-
duce minimum legal requirements that would regulate corporate responsibility
practices.
Another threat for CR practices is a common stereotype that they are equivalent
to PR practices and corporate marketing. The evidence for this statement is the
observation that Polish and foreign companies with increasing frequency use CSR
practices to build their reputation (for International review see: Kurucz, Colbert, &
Wheeler, 2008, pp. 190–191, for Polish examples see: Mazurkiewicz et al., 2005,
p. 21, Responsible Business Forum and GoodBrand, 2007, 2010). The surveys
performed by the Foundation for Social Communication confirm a fact of life
that CSR practices are implemented only in order to promote a given company
and develop its marketing strategy (Foundation for Social Communication, 2004).
Gasparski suggests that an effective solution to that problem would be the devel-
opment of ethical infrastructure which guarantees simultaneous development of
corporate responsibility without its negative link to PR (Gasparski, 2013, p. 230).
To conclude, the main challenge that Poland has to face now is to break a
common stereotype equating CR with promoting activities, increasing expenses
and growing economic as well as legal responsibility. It requires the introduction of
an extensive educational training based not only on surveys, but, first and foremost,
on scientific investigation. It can be achieved by the development of experimental
methods, which allow to understand which behavior is perceived as unfair in the
social norm and when it will be punished (i.e. for the Tit for Tat Game see: Axelrod,
1984; Axelrod & Hamilton, 1981). The application of experimental tools enabling
the evaluation of actual entrepreneurs’ behaviour may narrow the gap between
theory and practice of business ethics, which is a common problem concerning the
research on CSR performed both by the Polish and world-class scientists. As
indicated by Blowfield and Frynas “further progress in the area of CR outcomes
requires that research is extended (. . .) since the overall effects of corporate
responsibility actions on society remain at best fuzzy and blurred” (as cited in
Halme, Roome, & Dobers, 2009, p. 3). Considering the fact that the relationship
260 T. Potocki

between performance and Corporate Responsibility is an established research

direction in Western countries (see review in: Halme et al., 2009), whereas in
Poland it has just recently received sufficient attention, the circle of Polish scientists
should make every effort to develop this research subject.

6 Conclusions and Implications

Corporate Responsibility is a complicated issue which requires the adoption of a

complex approach based on the development of some strategic areas, namely:
education, research, moral leaders and institutional solutions.

6.1 Implications for Education–Shaping Future Moral

Leaders

The words uttered by Bardy, Drew and Kennedy perfectly suit the Polish reality:
“CSR must meet social awareness” (Bardy, Drew, & Kennedy, 2012, p. 270).
Jastrza˛bska and Legutko-Kobus reviewed the Polish research (five distinctive
research) focusing on that subject and found out that most students are not famil-
iarized with the concept of CSR, and even if they are, they identify it in most cases
only with social aspect (Jastrze˛bska & Legutko-Kobus, 2011, pp. 201–202). The
analysis of syllabuses from business studies run on four leading state economic
universities in Poland provides reliable information in this field. It shows that both
the bachelor and master studies in economics do not offer any subjects connected to
business ethics and CSR (Ibidem, 2011, p. 203). The situation is slightly better on
management studies, where students have such subjects mainly in the bachelor
academic programme (Ibidem, 2011, pp. 203–204). There is no doubt that this
status quo affects the approach to Corporate Responsibility and Business Ethics.
International comparative research, which covered also Poland, has additionally
confirmed this assumption. Padelford and White claim that the second year students
from CEE region “become more accepting of the morality of profit making” in
comparison to students in the first year of studies (see: Padelford & White, 2010,
p. 112), which may prove the fact that the subjects taught in the first years have a
powerful impact on students’ further development and that the taught subjects focus
on the main-stream economics with the leading role of homo economicus.
Considering the above stated facts one may assume that students in Poland are
not prepared to become leaders who are responsible not only for themselves but
also for others. Especially that the importance of moral education is wildly known
in Western Countries (see research review Reave, 2005). According to Ryan, the
universities ought to specialize in teaching business ethics (. . .) and its status should
at least be equal with the status of ethics itself. The Author of the Chapter is of the
Corporate Social Responsibility in Poland: From Theory to Practice 261

opinion that it refers particularly to economic universities, which should increase

the number of offered specialties and faculties related to ethics, social psychology
and behavioral economics. The adoption of an interdisciplinary approach is equally
important both for education and research.

6.2 Implications for the Research: The Role

of Interdisciplinary and Comparative Research

The socio-economic situation in Poland has been undergoing permanent changes

for the last 20 years and these changes have become more and more complex and
risky. The systemic transformation and accession to the EU created a need for
adjustment of ethical standards to the new economic reality. It triggered also the
necessity for interdisciplinary research in philosophy, psychology, sociology and
economics, which is not a simple thing to do. Kurucz, Colbert and Wheeler pointed
out that problem by saying that research on CSR owing to its complexity and
interdisciplinary nature may “be hard to measure with traditional quantitative
approaches that have an ontological view of reality” (Kurucz et al., 2008, p. 109).
On the other hand Barclay and Smith claim that “drawing upon sociological and
socio-psychological models of human behaviour provides a means of
comprehending the every-day pragmatic pressures which influence work place
behaviour” (Barclay & Smith, 2003, p. 323). Such a role may have ethical codes
determining standards of behavior, which apply for a given decision dilemma in an
organization (especially for wicked problems). They may be effective only if rules
included in these codes become second nature to the employees (the exogenous
moral behaviors will transform into endogenous ones) and they will take the form
of unconditional ethical habits occurring in decisions considering moral dilemmas.
Decisions based on experience are of great significance for decisions connected
with moral dilemmas, as pointed out by Tischner, “until now no one has ever gained
wisdom basing only on experience (. . .) it needs to be supplemented by reason (. . .),
which imposes new structures and order on experience” (Tischner, 2008, pp. 332–
333). And at that point the promotion of the action learning techniques may play a
leading role (for theory see i.e.: Revans, 1980, 1982, for practice see i.e.: Butler &
Leach, 2011; Revans, 1998).

6.3 Implications for Enterprises: The Role of Moral Leaders

The role of moral leaders in the current situation on the market is invaluable. It
seems that the presence of a model leader in SMEs is the main factor triggering the
implementation of CR activities (Bartkowiak, 2012, p. 2012). Unfortunately, as
Scharmer and Kaufer claim, “disconnect between institutional leadership and
262 T. Potocki

people (. . .) collectively creating results that nobody wants” (Scharmer & Kaufer,
2013, p. 6). It means that the leaders cease to notice how their behavior affects their
employees.
The role of individual’s morality from the perspective of business ethics has a
long tradition in Poland (see i.e.: Gasparski, 1994; Kotarbiński, 1987, 1999;
Ossowska, 1957; Szołtysek, 2007). Morality refers to an individual behavior,
whereas ethics to social attitude. On account of that, as noticed by Gasparski, ethics
should not be in contradiction with individual morality and therefore the lesser the
morality in an organization, the greater the role of ethics should be (Gasparski,
2007, p. 530). Nevertheless, according to the research, the moral intransigence in
business relations in Poland may “be connected with heroic conduct or even
gullibility, and the necessity of its adoption results more from half-heartedness of
respondents than real standards of behavior” (Gasparski et al., 2004, pp. 22, 23).8 It
is still commonly believed that morality in business is an extravagance for the
wealthy, who do not have to fight for survival because they have accumulated
enough wealth (Żylicz & Wolniewicz, 2004, p. 182). The research performed by
Gasparski proves the fact that companies with a more favourable financial situation
attach more significance to CR rules (Gasparski et al., 2004, pp. 20–21).
Considering the above stated facts one may say that business leaders in Poland
play a significant role in the process of cultural transformation, because, as Gajos
claims “very often the process of values transformation starts in business (. . .)
owing to the fact that this environment is perceived as reference group” (Gajos,
1999, p. 123).9 Moreover, other research show that entrepreneurial skills are
aligned with moral reasoning and ethical decision making (see review in Harris,
Sapienza, & Bowie, 2009, pp. 408–410). It would mean that contrary to a common
belief in Poland that the implementation of CR practices increases expenses, the
situation is reverse. Unfortunately, there is no research linking risk attitude with
ethical behavior in transition dimension to prove this hypothesis, especially from
the perspective of a SME owner (see Schminke, Ambrose, & Neubaum, 2005).

6.4 Implications for the Government: Understanding

the Role of a Leader

In case of Poland the government should be responsible for supporting and regu-
lating education programmes, providing access to knowledge and data as well as
deciding between non-hierarchical and hierarchical regulating way (compare with
Steurer, 2011, p. 279). The decision to introduce soft public policies may not be an
easy way to change the way Polish companies act (compare with: Steurer,
Martinuzzi, & Margula, 2011, p. 207). The Author of the Chapter believes that

8
Author’s translation from Polish.
9
Author’s translation from Polish.
Corporate Social Responsibility in Poland: From Theory to Practice 263

implementing minimum but compulsory standards may bring immediate effects,

particularly in case of SMEs, because the current governmental role of a patron
does not favour any positive changes.
Before it happens, however, the government ought to become a model of ethical
conduct and therefore transform into a trustworthy institution because otherwise its
decisions and activities will never win social recognition. It mainly refers to
strengthening the participatory, direct, distributed, digital and dialogic democracy
(see more in: Scharmer & Kaufer, 2013, pp. 197–203) or as Kołodko stated “the
best results in economic policy are provided by an appropriate mix of financial and
social engineering, technocratic macroeconomic governance and genuine social
dialogue, professional pragmatism and social sensitivity” (Kołodko, 2009, p. 344).
The cooperation with business associations may be of great significance in the
above mentioned process. According to Valentine, Godkin, Cyrson and
Fleischman, “the Polish government, by cooperating with professional business
associations, needs to actively promote organizational ethics by developing and
sponsoring legislation that supports socially responsible business” (Valentine et al.,
2006, p. 81).
There exists a need for stimulating the changes in the perception of social
economy, which currently focuses on NGOs sector and collective institutions,
and should concentrate on integrating and supporting the socially innovative
networks of institutions (see examples: Business Alliance for Local Living Eco-
nomics, Global Alliance for Banking on Values, and read more in Scharmer &
Kaufer, 2013).
The Polish society currently needs two things: satisfaction of their basic needs
(as it happened under Communism) and also creation of conditions favouring the
feeling of satisfaction with life. Bunge claims that if these conditions are not met,
Poland will be a society of poverty (as cited in Gasparski, 2007, p. 392), where the
poor blame the wealthy for their poverty and the wealthy accuse the poor of
laziness. In such situation the growing socio-economic inequality may cause
nostalgia for the centralised economy with job guarantee and high social security
(see discussion in: Luthans, Patrick, & Luthans, 1995), particularly among people
who started their professional career in communist times and show different
attitude towards rules of work ethics (see for example: Alesina & Fuchs-
Schuendeln, 2007). It may be the reason why the efforts put within the recent
years into developing the ethical infrastructure may be thwart by negligence of
socio-economic policies. Nevertheless, the research show that after adjusting labour
law to the European standards there has been a considerable improvement of
working conditions, in particular in SMEs (see Mecina, 2011, pp. 115–117).
To conclude, it should be emphasized that Poland has prerequisites to become a
model country within the area of CR, and not only in CEE region but also the whole
EU. A great number of corporate and social responsible activities derives from
Christianity and Polish moral tradition, which are typical only for the daily life of
Poles. It can be easily observed in poor and rural regions, where the social capital
and mutual help are a norm. One should draw extensively from these traditions in
order to shape moral standards of behavior applied in private and public life.
264 T. Potocki

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Corporate Social Responsibility in Poland:
From the Perspective of Listed Companies

Maria Aluchna

1 Introduction

Corporate social responsibility (CSR) is one of the most dynamically developing

theme in management literature as societies gain awareness on the social and
environmental challenges and companies perceive addressing this concerns as a
source of the competitive advantage (Crane & Matten, 2007; Idowu & Louche,
2011). The interest in CSR is accompanied by the understanding for the necessity of
a more balanced measures of companies’ success which incorporate the economic
as well as environmental and social performance (Branco & Rodrigues, 2006; Lee,
Fairhurst, & Wesley, 2009). The companies reactions to these changes driven by
social pressure and regulatory regimes include the implementation of a set of
various CSR initiatives, engagement in stakeholder management and social dia-
logue, improved reporting and disclosure (Bhattacharya, Korschun, & Sen, 2008;
Moir, 2001).
The paper presents the results of the qualitative research of the CSR practice
implemented in Polish companies listed on the Warsaw Stock Exchange according
to selected criteria. The analysis is based on the case studies of policies and
programs adopted by companies included the CSR rating known as RESPECT
Index and compared to their peers operating in the same industries not covered by
the benchmark. The goals of the research are to identify main differences in the two
sample groups of companies (if there are any) with respect to CSR initiatives,
reporting and stakeholder dialogue as well as to trace the changes in the CSR
policies observed within the 5 years of 2007–2011. The paper presenting the Polish
experience attempts to address the issues of CSR in emerging/transition economy
where the state is weaker and its interventions appear to be rare suppressed by the
corporate activities.

M. Aluchna (*)
Warsaw School of Economics, Warsaw, Poland
e-mail: [email protected]

© Springer International Publishing Switzerland 2015 271

S.O. Idowu et al. (eds.), Corporate Social Responsibility in Europe, CSR,
Sustainability, Ethics & Governance, DOI 10.1007/978-3-319-13566-3_15
272 M. Aluchna

The paper is organized as follows. The first section outlines the concept of
corporate social responsibility understood as a driving force for the changes of
the role expected from companies and played in societies and economies. The
second section addresses the practical dimensions of CSR pointing at set of possible
programs and initiatives undertaken by companies which comply with the CSR
concept assumptions. Additionally, using the degree of integration the CSR ideas
into the strategy and operation the levels of a company social and environmental
engagement are discussed. The description of research conducted in the sample of
44 companies listed at the Warsaw Stock Exchange with the reference to the
methodology, sample construction and results are delivered in the third section.
The collected evidence on differences between CSR practices adopted by
RESPECT index companies and their peers that stay out of the benchmark are
discussed referring the results to the typology of stages of companies’ social and
environmental engagement. Final remarks are presented in the conclusion section.
The contribution of the paper is rooted in the attempt for the identification of CSR
practices adopted by Polish listed companies as well as the analysis the companies’
policies of the social and environmental engagement measured by the importance
of CSR programs in the overall strategies and the integration of CSR assumption in
their goals and operations.

2 Corporate Social Responsibility and Companies’ Role

in Society and Economy

Corporate social responsibility is defined as a concept “whereby companies inte-

grate social and environmental concerns on their business operations and in their
interaction with their stakeholders on a voluntary basis” (COM, 2002; Neal, 2008)
to achieve long term sustainable growth and development. It serves as a crucial
element of the dialogue between companies and their stakeholders (Bhattacharya
et al., 2008; Hollender & Fenichell, 2004; Hopkins, 2007) and refers to the
discretionary stakeholders’ expectations that business should be accountable to
(Robins, 2005). CSR is also understood as a method to address the social and
environmental concerns involving the integration of environmental, social and
economic considerations into an organization’s corporate culture and strategy
formulation (Hawkins, 2006). In the broader sense, CSR is perceived as the
obligations which a business has to fulfill according to the societal expectations
to be considered a good corporate citizen (Lee et al., 2009).
The concept of corporate social responsibility is placed within a range of relating
terms and topics including business ethics, stakeholder theory, triple bottom line
and sustainability which contribute to the development and understanding of the
company’s role in the society and economy as presented in Fig. 1
Figure 1 provides a framework of related topics including CSR, stakeholder
management, TBL and sustainability which have impact on the dynamics changes
of companies’ role in business and societies. The interdependences between these
Corporate Social Responsibility in Poland: From the Perspective of Listed. . . 273

Corporate social
responsibility

Company role in
Stakeholder Triple bottom
economy and
management line
society

Sustainability

Fig. 1 Theoretical concepts shaping the company’s role in society and business. Source own
compilation

concepts lead to the development of the theoretical framework thereof and contrib-
ute to the debate on the purpose of the corporation and the understanding of the
company’s role in the society and economy. The emergence of stakeholder theory
and the criticism of the primacy of shareholder interests motivated companies to
widen the group they intend to satisfy within their operation and through the
communication (Bonn & Fisher, 2011). The development of stakeholder theory
opposed to the shareholder primacy and resulted in the evolvement of stakeholders’
role and impact upon the company (Kemper & Martin, 2010). Thus, the stakeholder
management implies the practical dimensions of their participation and impact on
company’s operation aiming at improving the relations between different stake-
holder groups and the company. It also assumes that stakeholder contribution and
experience may result is changes in the processes and systems of the company
tailoring them to the stakeholders’ expectations. The stakeholder management is
suggested to develop through three main steps (Foster & Jonker, 2006) from the
relations characterized by manipulation, non-participation and operational focus
level of decision to the relations based on information, consultation and operational
and instrumental level of decisions. The final stage of management with stake-
holders assumes the mature relations characterized by partnership and participation
and instrumental and strategic level of decision where stakeholder communication
is carried out in the form of a dialogue and stakeholder engagement is transitive.
Triple bottom line (TBL) concept (Elkington, 1997; Slapper & Hall, 2011)
proposes three Ps which stand for profit, people and planet (Fauzi, Svensson, &
Rahman, 2010) and requires company to incorporate the expectations of stake-
holders in its strategy and operations. The triple bottom line embraces the social,
economic and environmental dimensions of corporate activity which targets fulfill-
ing the requirements and considering the limitations of people, planet and profit
(Robins, 2006; Slapper & Hall, 2011; Vanclay, 2005). With the influence of the
TBL companies are required not longer to focus solely on financial performance but
are suggested to address social and environmental challenges and enhance their
social performance. The third approach presented in Fig. 1 is sustainable business
viewed as a more complex and systemic approach which is targeted at the long term
274 M. Aluchna

perspective of operation and aims at shaping the future of the global economy
(Sneirson, 2009). Meanwhile corporate social responsibility is understood as a
reactive, reputation driven activity with limited reach into core business focusing
mostly in current issues. Therefore some authors view sustainable development as
the next stage, higher level of company’s commitment to social and environmental
performance (Mostovicz & Kakabadse, 2011). In result, these three concept remain
significantly interdependent and enriching each other. And although for CSR the
normative case assuming the moral obligations of a company for the society and the
business case perceiving the concept as the element to success it embraces eco-
nomic suitability, environmental sustainability and social sustainability (Branco &
Rodrigues, 2006).
Undoubtedly, the development of the analytical regime and theoretical frame-
work of CSR leads to significant re-conceptualization of the relationships between
the state, business, and civil society, governance and policy (Fairbrass & Zueva-
Owens, 2012). The framework discussing three challenges to CSR which include
economic responsibility, public responsibility and social responsiveness provides
the model for corporate social performance and leads to the emergence of a new
paradigm (Wartick & Cochran, 1985). In the new paradigm social needs and
financial motives do not contradict each other but appear to provide support and
complementary outcomes. This implies the relations between social, environmental
and financial performance (Cornelius, Todres, Janjuha-Jivraj, Woods, & Wallace,
2008). The changing dynamics of the leading paradigms represents the pattern and
structure of governance both in the economic system and in the company and
reveals the relationship between business, government and community. It also
contributes to the key themes and decision support tools for risk management.
Thus in the context of significant changes “the traditional decision making of the
powerful bureaucracy and corporations of the industrial era is no longer either
appropriate or acceptable (Benn & Dunphy, 2007). The traditional systems of
democracy emerged upon the fundaments of individual freedom and property
rights, free enterprise and market fundamentalism and assumed the dominance of
self-interest and the shift from the state authority to decentralized decision making
(Benn & Dunphy, 2007). Then the deliberative democracy aimed at overcoming
constrains of traditional system by replacing focus on votes by focus on processes
of public deliberation. Radical pluralism rooted in postmodern concerns for identity
introduced group interests as the framework for political decision making within
non-hierarchical networks as a way of organizing relations between corporations
and governments. New institutionalism addressed the problems of global impact of
regional forces and the notion of common costs of externalities. This approach
offered the governance mechanisms of horizontal interactions to reduce institu-
tional resistance to change. The ecological modernization is based on the optimistic
assumption that capitalist systems are not necessarily in the conflict with the natural
environmental concerns. It underlines the business willingness to adopt new tech-
nologies and introduce innovations which limit and mitigate the potential conflict
and address the expectations of stakeholders. And finally, the theory of ecological
democracy focuses on “how to articulate the public interest though the development
of civil society and on governance problems” (Benn & Dunphy, 2007). The
Corporate Social Responsibility in Poland: From the Perspective of Listed. . . 275

evolution of emergent management theory ranges from stakeholder interaction,

narrative theory, leadership styles, cultural framing to bridging social capital and
the emergence of reflexive management.

3 The Business Case for Corporate Social Responsibility

3.1 The Practice of CSR

The evolution of the concept of corporate social responsibility is not only noted in
the academic studies with the emergence of theoretical framework, the develop-
ment of methodological regime and the growing number of research and analysis.
Although the concept has been developing since the 1950s of the twentieth century
(Carroll, 1999), it is the recent years that see growing interest in the CSR initiative
and programs both in the academic studies and corporate practice (Bhattacharya
et al., 2008). With the growing number of studies the impact of CSR upon corporate
reality and activities appears to be better explained and understood indicating the
mutual links and interdependencies between business, society and policy (Jamali,
2008). They also show the positive influence of the concept both on companies and
economies at the micro, mezzo and macro level. Although for some time, at the
micro level, the research has been revealing the mixed evidence on relations
between CSR and profitability (Aupperle, Carroll, & Hatfield, 1985; Waddock &
Graves, 1997) with the address of the long term perspective more positive results
were noted (Mackey, Mackey, & Barney, 2007). With the emergence of the so
called business case for CSR (Barnett, 2007) and the adoption of resource based
view internal and external benefits were identified (Branco & Rodrigues, 2006). In
result, the CSR concept proved to serve as the source of competitive advantage
improving the communication to stakeholders, enhancing image and reputation,
leading to innovation and the development of new business models. It may also
lower the negative impact of the recession or economic slowdown and protect the
company from deteriorating the performance in such periods (Arevalo & Aravind,
2010; Charitoudi, Giannarakis, & Lazarides, 2011). Finally, adopting CSR by a
company produces positive spillovers for the other aspects of company operation
such as to business conduct, strategy, marketing and corporate governance (Jamali,
Safieddine, & Rabbath, 2008; Tuan, 2012). Therefore at the mezzo level the
evolution of CSR portraits the changes in social perception towards the most
problematic global problems and emerging challenges and is perceived as a driving
force to the changes of mutual relationships between different structures of gover-
nance as new pressures and challenges related to natural environment and global
society and the risks and uncertainties attached emerge. The discussion also illus-
trates the changing dynamics in the hierarchy of key success factors in company’s
operation and the importance of different management approaches. Adoption of
CSR concept for the business case leads to reorientation of corporate social
performance model (Swanson, 1995). At the macro level CSR enhances social
276 M. Aluchna

and economic development (Blowfield, 2005) leading to the emergence of civic

society, sustainability and innovation (Fairbrass & Zueva-Owens, 2012). In result,
the concept of CSR appears to develop significantly also on the practical side with
the emergence of the so called business case for corporate social responsibility.
Companies realize the economic and environmental challenges as well as growing
social awareness and perceive their active reactions to these concerns as the
possible source for competitive advantage.
The character of CSR and the CSR communication rely on the corporate
resources and competences which remain path dependent, causally ambiguous,
socially complex (Branco & Rodrigues, 2006). These practices are heavily
anchored in a number of aspects of institutional characteristics and organizational
features (Schultz & Wehmeier, 2010). As Matten and Moon (2008) discuss the
practice of CSR is rooted in the culture, values and norms which shape institutions
and impact the discretionary behavior of companies. The different characteristics
and constellation of these features result in the emergence of the explicit approach
in which corporate activities assume such behavior per se and the implicit approach
which perceives the role of a corporation within wider formal and informal insti-
tutions. The aspects of local knowledge, expected level of corporate responsibility,
the consensus reached among stakeholders as well as the relationship to financial
performance serve as the issues providing for legitimacy for institutionalizing CSR
(Pava & Krausz, 1997). Additionally, the key organizational features referring to
“cognitive, linguistic, and conative dimensions” and the interdependences between
them also influence the orientation that guides CSR related activities (Basu &
Palazzo, 2008). The research by Robertson and Nicholson (1996) proposed how
the CSR institutionalization impacts how different stakeholders are addresses laid
in the practice of communication and reporting. They provided the so called
hierarchical model of disclosure which covers three main levels of communication
from general rhetoric, to specific endeavors, to implementation and monitoring.

3.2 Levels of Corporate Engagement

The business case of corporate social responsibility offers a ground for different
levels of corporate engagement and becomes a starting point for the emergence and
development related concepts such as social marketing or corporate citizenship. In
business practice corporate social responsibility laid foundations of other relates
themes such as corporate cause promotions, cause-related marketing, corporate
social marketing, corporate philanthropy, community volunteering and socially
responsible business (Dunne, 2007). Additionally it gave rise to socially responsi-
ble investment and employee volunteering. Using an approach the levels of com-
pany engagement in CSR distinguish (Griffin, 2011):
• Philanthropy representing the charity and funds donation for selected purposes
and activities which are not targeted for profit increase and improvement of
market position,
Corporate Social Responsibility in Poland: From the Perspective of Listed. . . 277

Table 1 CR actions’ characteristics

Posture on CR
CR actions demand Competitive aim Type of strategic activity
Passive Complying with No competitive aim Inactions
law
Reactive Responding to Maintaining competitive Instrumental actions (envi-
CR demand advantage ronment as means)
Proactive Anticipating CR Enhancing competitive
demand advantage
Entrepreneurial Enhancing CR Detecting new competi- Awareness actions (environ-
demand tive advantage ment as ends)
Creative Creating new CR Creating new competi-
demand tive advantage
Source Heikkurinen (2006)

• Social marketing representing charity activities and engagement in social initia-

tives for the purpose of profit increase and improvement of market position,
• Social responsibility illustrating corporate activities directing at supporting and
contributing to social initiatives or solving social problems,
• Corporate citizenship which stands for companies playing a role of responsible
citizen, responsible member of the society (McIntosh, Thomas, Leipziger, &
Coleman, 2003; Waddock, 2007),
• Social enterprise illustrating company which is able to solve social problems in
business manners (Cornelius et al., 2008).
The typology proposed by Heikkurinen (2006) identified five different corporate
responsibility actions depending on the posture on the activity demand, its com-
petitive aim and reference to strategy. The scope of CR actions’ with its character-
istics is presented in Table 1.
As proposed by (Mostovicz & Kakabadse, 2011) companies adopting CSR
principles may choose between various strategic approaches depending on the
degree of two dimensions: widening organizational view (intrinsic) and widening
social view (extrinsic). The four views include the so called micro view, macro
view, wide view and the long term view. The micro view provides “the license to
operate’ and is limited to the shortened timeframe of economic stakeholders, while
the macro view perceives CSR as the moral obligation to society. The goal of
improving company reputation amongst stakeholders is proposed by the wide view.
And finally the long term view of CSR encompasses the social and organizational
view assuring for realization of the sustainable development. This model delivers a
very useful framework to analyze the CSR strategy adopted by companies with the
insights on their motivation to address this issue. The model proposed by Malan
(2011) using two identifies four strategies resulting from interaction between two
adopted dimensions of social involvement and political involvement—corporate
tourist (low social involvement and low political involvement), corporate citizen
(high social involvement and low political involvement), corporate colonialist (low
social involvement and high political involvement) and corporate activist (high
278 M. Aluchna

Fig. 2 A model of A model of companies’ engagement in CSR

companies’ engagement in
HIGH
CSR. Source own
Extrinsic
compilation Instrumental Balanced
motivation
(External
communication)

LOW Communication
Passive/ denial
LOW laggards

LOW HIGH
Intrinstic motivation (internationalization of values)

social involvement and high political involvement). This model proves to be useful
for analysis embedded in political economy; it may not however explain the
strategic approach of the companies which engage in CSR activities driven by the
expectations of their stakeholders. The organizational dimensions of CSR adoption
are not covered with this approach.
The presented literature review delivered insights of CSR theoretical framework
and practice indicating the most important elements and dimensions which impact
CSR policy and activity. Using the notions of the literature review for the purpose
of the paper a model of companies’ engagement in corporate social activities is
proposed. The model uses two dimensions of extrinsic motivation of managers to
implement and communicate CSR initiatives as well as the intrinsic motivation to
implement CSR programs and incorporate them into organizational structure and
culture. The illustration of the model is provided in Fig. 2.
As presented in Fig. 2 companies revealing low motivation for incorporating
CSR into organizational culture and structure pursue the passive or denying
approach. The companies pursuing the approach characterized by focus on inter-
nationalization of CSR values into company operation are called communication
laggards, while those which are mostly interested in the external communication to
stakeholder and are interested improvement of their image adopt instrumental
approach. Companies which combine dedicated approach to integration of CSR
assumptions and notions into organizational structure and culture developing their
communication of external stakeholder are found to reveal a balanced approach.
The motivation of this proposed framework is rooted in the idea to note the
engagement and the motivation of companies to adopt CSR policy. It resembles
the model proposed previously by Mostovicz and Kakabadse (2011) but also
intends to take into account the prime source driving companies’ CSR strategy.
This may be useful for the analysis of small companies which quite often are not
familiar with the CSR methodology but are very active in promoting its activities
and values. Also some companies are known for their reputation driven instrumen-
tal approach to CSR.
Corporate Social Responsibility in Poland: From the Perspective of Listed. . . 279

4 Research

4.1 CSR Practice in Poland

Corporate social responsibility in Poland emerged in the post socialist transition

environment and the conditions of the emerging markets. The political, economic
and social determinants have significant impact of the strategy of companies and
the expectations of stakeholders. Despite the rapid growth observed after the early
transition recession and then sustained by the accession to the European Union, the
socialist heritage is mostly visible in the dimension of the Polish society (Aluchna,
2010). These features include the underdevelopment of the civil society, low levels
of social capital, low interest in volunteering activity or social contribution as well
as the passiveness of stakeholders and lower importance of social performance
(Czapiński, 2009; Gasparski, 2005). Still the price plays a crucial role for the
purchasing decision leaving social and environmental aspects behind.
This characteristic of the Polish society definitely is a subject to changes. On one
hand these changes are driven by the market development and the evolution of the
stakeholders’ expectations who are more interested in the social and environmental
dimension of companies functioning. On the other hand the impact for this changes
comes from The harmonization process within EU laws and institutions provided
frames for CSR and environmental protection and encourage companies to transfer
know how from Western Europe. The case of Polish listed companies delivers an
interesting insights in the practice of CSR revealing the companies strategies in
reaction to the emerging market environment and conditions of weaker
(as compared to the west of the EU) institutional order (Aluchna, 2010; Boni,
2009). The studies conducted so far illustrated CSR activities of particular compa-
nies. The collected evidence suggest that the CSR activities focus on educational
programs, sport initiatives, environmental actions, support for handicapped, sick or
excluded and employee volunteer programs (Kuraszko & Augustyniak, 2009;
Ministry of Economy, 2010). It is important to provide a more general picture of
the CSR practice on Polish listed companies accompanied by the identification of
their disclosure and reporting standards as well as the direction for further devel-
opment. Additionally, the studies conducted so far lack the dynamic approach
addressing the changes on the CSR practice implemented by public listed compa-
nies and their potential response to the global financial crisis with respect to the
scope of CSR activities. This gap is intended to be filled by this research.

5 Research Goals and Methodology

The goals of the research were to identify the CSR practices adopted by companies
listed on the Warsaw Stock Exchange according to selected measures assuming the
differences resulting from different company characteristics and institutionalization
280 M. Aluchna

approaches. More precisely, the analysis aimed at the identification of main differ-
ences between two sample groups of publicly listed companies comparing compa-
nies covered by the CSR/sustainability rating known as RESPECT Index and their
peers operating in the respective industries not included in this benchmark. The
analysis was to identify the differences (if there were any) with respect to CSR
initiatives, reporting and stakeholder dialogue as well as to trace the changes in the
CSR policies observed within the last 5 years of 2007–2011.
In order to pursue the research goals the qualitative analysis of the CSR practice
implemented in Polish companies listed on the Warsaw Stock Exchange was
conducted according to selected criteria. The RESPECT companies need to comply
with the certain characteristics (free float of shares, accountability to shareholders,
corporate governance best practice, disclosure) as well as standards of their policy
towards stakeholders (implemented CSR activities, reporting). The presence in the
RESPECT index is dependent on the assessment results conducted by Deloitte and
verified every year. Therefore the RESPECT companies are constantly monitored
with regard to their CSR performance and reporting practices what results in the
dynamics of the benchmark composition. The research was based on the case
studies of policies and programs adopted by both groups of companies according
to the information they disclose on their websites and publish in their CSR reports.
The research included the analysis and identification of the following aspects:
• The content and functioning of the CSR website,
• The form and content of the CSR report,
• The existence of the CSR department within the organizational structure,
• The integration of CSR into the company strategy,
• The CSR activities are conducted by the company,
• The directions of CSR activities undertaken by companies (education, national
heritage, sport, ecology, support for handicapped, sick or excluded people),
• The cooperation of the NGOs,
• The difference of CSR activities and functioning between RESPECT Index
companies and companies not included in the benchmark,
• The pursuit of CSR strategy according to the typology proposed in Fig. 2.

6 Research Questions and Sample

In order to pursue the research goals the following research questions were
formulated:
• Q1: Are the RESPECT companies more active on their CSR websites as
compared to companies not included in the benchmark?
• Q2: Do the RESPECT companies publish CSR reports more often than compa-
nies not included in the benchmark?
• Q3: Do the RESPECT companies form CSR department more often than
companies not included in the benchmark?
Corporate Social Responsibility in Poland: From the Perspective of Listed. . . 281

• Q4: Do the RESPECT companies integrate CSR into their strategies more often
than companies not included in the benchmark?
• Q5: Do the RESPECT companies form a dedicated CSR foundation more often
as compared to companies not included in the benchmark?
• Q6: Do the RESPECT companies spend more on CSR activities as compared to
companies not included in the benchmark?
• Q7: Do the RESPECT companies get involved in better coordinated CSR
activities as compared to companies not included in the benchmark?
• Q8: Do the RESPECT companies cooperate with NGOs more active than
companies not included in the benchmark?
• Q9: Which strategy as presented in Fig. 2 do the sample companies pursue?
Questions Q1 and Q2 address the first dimension as provided in the proposed
model referring to the extrinsic motivation of managers to implement and commu-
nicate CSR initiatives, while the questions Q3–Q9 are to give evidence for the
intrinsic motivation to implement CSR programs and incorporate them into orga-
nizational structure and culture. The research was based on the case studies analysis
on the sample of 44 companies for the period of 5 years (2007–2011). The
qualitative analysis covered the study of the companies’ websites, annual reports
and CSR reports published by sample companies. According to formulated assump-
tions and goals the sample covered companies included in the RESPECT index
fourth edition as presented in Table 2.
The goal of comparing the CSR practices required the identification of the
RESPECT companies’ peers characterized by similar features (size, ownership
structure) and operating in the respective industries. The sample companies
which stay out of the benchmark were selected according to the Warsaw Stock
Exchange statistics focusing on the size and sector of operation in order to provide
for the comparison. The control group of companies was extended as it revealed
over-representation of banks and financial services companies while under-
representation of companies operating in mining and extraction as well as chemical
industries. The final research sample of the RESPECT companies with their peers
with the breakdown by industries is presented in Table 3.
However, the constructed research sample denotes several constrains—due to
the limited number of firms operating in mining and extraction industry only one
company (JSW) was selected as the peer for the 3 RESPECT companies (KGHM,
PGNiG and Bogdanka). The petroleum sector was combined with the petrochem-
icals, while some banks dropped out of the control group to maintain the balanced
representation in the sample. Due to the significant growth and integration the ITC
and telecommunication sector was treated as combined and CSR practices of TP SA
and Netia were referred to the activities of TVN and Cyfrowy Polsat.
 282

Table 2 23 RESPECT index companies (half of the research sample)

Company ID Shares traded Market cap (PLN) Share in the index (%) Sector
KGHM PLKGHM000017 44,510,000 6,672,049,000 12.372 Mining and extraction
PZU PLPZU0000011 15,931,000 5,273,161,000 9.778 Insurance
PKNORLEN PLPKN0000018 145,216,000 5,130,481,280 9.513 Petrochemical
TPSA PLTLKPL00017 285,712,000 4,799,961,600 8.900 ICT/telecommunication
PGE PLPGER000010 237,817,000 4,684,994,900 8.687 Power generation
PGNIG PLPGNIG00014 1,206,575,000 4,500,524,750 8.345 Mining and extraction
BOGDANKA PLLWBGD00016 30,771,000 3,950,996,400 7.326 Mining and extraction
INGBSK PLBSK0000017 32,525,000 2,829,675,000 5.247 Banking
HANDLOWY PLBH00000012 32,665,000 2,515,205,000 4.664 Banking
NETIA PLNETIA00014 381,827,000 2,256,597,570 4.184 ICT/telecommunication
MILLENNIUM PLBIG0000016 418,366,000 1,790,606,480 3.320 Banking
LOTOS PLLOTOS00025 60,797,000 1,696,236,300 3.145 Petrochemical
AZOTYTARNOW PLZATRM00012 43,566,000 1,367,101,080 2.535 Chemical
SWIECIE PLCELZA00018 17,000,000 1,208,700,000 2.241 Pulp/chemical
BUDIMEX PLBUDMX00013 10,452,000 898,872,000 1.667 Construction
KREDYTBANK PLKRDTB00011 54,332,000 769,884,440 1.428 Banking
PBG PLPBG0000029 10,513,000 659,690,750 1.223 Construction
KOGENERACJA PLKGNRC00015 7,450,000 588,550,000 1.091 Power generation
ELBUDOWA PLELTBD00017 4,748,000 566,911,200 1.051 Electric power engineering
APATOR PLAPATR00018 25,576,000 562,672,000 1.043 Electric power engineering
CIECH PLCIECH00018 29,431,000 527,109,210 0.977 Chemical
BANKBPH PLBPH0000019 8,318,000 345,197,000 0.640 Banking
IDMSA PLIDMSA00044 177,105,000 334,728,450 0.621 Financial services
Source based on http://www.gpw.pl/portfele_indeksow#RESPECT
M. Aluchna
Corporate Social Responsibility in Poland: From the Perspective of Listed. . . 283

Table 3 The final research sample

Sector RESPECT index company Control company
Mining and extraction KGHM JSW
PGNIG
BOGDANKA
Insurance PZU TU EUROPA
Petrochemical and chemical PKNORLEN SYNTHOS
LOTOS PULAWY
AZOTYTARNOW BORYSZEW
SWIECIE POLICE
CIECH DEBICA
ICT TPSA CYFROWY POLSAT
NETIA TVN
Power generation PGE TAURONPE
KOGENERACJA ENEA
Banking INGBSK PKOBP
HANDLOWY PEKAO
MILLENNIUM BZWBK
KREDYTBANK BRE
BANKBPH GETINOBLE
Construction BUDIMEX POLIMEXMS
PBG GTC
Electric power engineering ELBUDOWA KOPEX
APATOR STALPROD
Financial services IDMSA OPENFIN
Source own compilation

7 Research Results and Discussion

The qualitative analysis of the content of the companies’ websites, reports, policies
and undertaken initiatives with respect to corporate social responsibility was
conducted. The empirical material was hand collected within a larger research
project on the practical implementation of CSR in companies’ strategy and man-
agement conducted in the Department of Management Theory, Warsaw School of
Economics. The research project is managed and supervised by Professor Piotr
Płoszajski. The research results with the reference to the formulated research
questions are collectively presented in Table 4.
The results revealing the practice of CSR activity of Polish listed companies
indicated some differences between the group of RESPECT Index firms and the
companies which stay out of the benchmark with respect to majority of analyzed
dimensions. Yet, the observed differences are smaller than expected, particularly
for banking and ICT sectors as well as for companies operating in power generation
and mining and extraction industries. Both groups revealed similar level and
characteristics as far as the activity of companies’ websites is concerned. Addition-
ally, with respect to the coordination of the CSR activities only few differences
were denoted as they covered similar areas of the CSR concept such as education,
284 M. Aluchna

Table 4 The research results with the reference to the formulated questions
Aspect RESPECT companies Control group companies Observed differences
Active Generally well Fragmented, less visible, Yes, some differences,
website presented and structured ‘hidden’ with other depending on the sector
with easy access aspects of company and the particular com-
operation pany, no major differ-
ences for banking,
power generation, ICT,
mining and extraction as
these sectors reveal high
standards
CSR report Published, updated ver- Published less frequently Yes, significant differ-
sion available or not provided ences, no major differ-
ences for banking,
power generation, min-
ing and extraction as
well as ICT since these
sectors reveal high
standards
CSR Usually formed within Rarely formed within the Yes, significant differ-
department the organizational organizational structure ences, no major differ-
structure ences for banking,
power generation, min-
ing and extraction
Integration of Yes, clearly communi- Less frequently inte- Yes, significant differ-
CSR into cated and placed within grated into strategy, no ences, no major differ-
corporate strategic goals and reference to CSR in mis- ences for banking,
strategy strategy sion or strategic goals power generation, min-
ing and extraction
CSR Quite often formed to Rarely formed Yes, significant
foundation support or take over differences
CSR activities
Coordination Covering the same areas of education, national her- No major differences
of CSR itage, promoting environmental protection, support
activities of poor, sick or excluded people
Cooperation Yes, engagement in Lesser importance, fewer Yes, significant differ-
with NGOs social dialogue, cooper- examples of cooperation ences, RESPECT com-
ation with different with NGOs, mostly panies reveal more links
organizations noted in banking, power with NGOs
supporting the imple- generation, mining and
mentation of CSR extraction
programs
Pursued CSR Balanced Instrumental Differences except for
strategy banking, oil and extrac-
tion industry
Source own compilation based on the content of the CSR websites of analyzed companies
Corporate Social Responsibility in Poland: From the Perspective of Listed. . . 285

national heritage, promoting environmental protection, support of poor, sick or

excluded people. Interestingly, the companies not covered by the RESPECT Index
revealed good practice in terms of disclosure providing CSR reports on their
websites. The reasons behind it seem to be the following—banking sector in Poland
is dominated by subsidiaries of global players who transmit the CSR and reporting
standards from their parent companies. The practices on the Polish market result
from the overall corporate policy of these global players who are more aware of
CSR importance and comply with higher standards. On the other hand, the power
generation and mining and extraction industries, so the other sectors of small
differences between two sample groups, are perceived as socially controversial
and environmentally challenging and may get involved in CSR activities anticipat-
ing potential conflicts or problems. Also the smallest differences were depicted
amongst sectors where the largest companies operate what confirms the earlier
observed relations between company size and its CSR activity. Probably, the largest
companies not only have the most substantial budgets but also stay in the public
spotlight and perceive the CSR engagement as an important element for their
performance and reputation improvement. The most significant differences were
found with regard to degree of the integration of CSR into corporate strategy what
de facto distinguishes the companies which truly adopt CSR requirement and ideas
into their operation as opposed to those which pursue the instrumental strategy
treating CSR as the ornament element of their public relations and communication
policy. The dedications to integrate CSR into corporate strategy is also transmitted
into the role and place of the CSR department in the organizational structure, the
cooperation with NGOs and the formation the corporate foundations which support
the implementation of particular programs and initiatives.
In sum, the results can be summarized with three main conclusions:
• Polish listed companies seem to understand the value of CSR for their perfor-
mance and reputation—even those not included in the RESPECT index, com-
municate their involvement in CSR providing information and publishing
reports on their websites,
• Companies covered by RESPECT Index integrate the CSR concept into their
mission, goals and strategies as well as organizational structures and cooperation
with stakeholders,
• RESPECT companies pursue the balanced strategy according to the typology
proposed in Fig. 2, while non-RESPECT companies tend to realize instrumental
strategy with the banking and oil and extraction sectors as the exception.

8 Conclusion

Corporate social responsibility is well developed concept adopted in business

practice. Companies not only respond to the social pressure and environmental
challenges but they also use the CSR concept for strengthening their corporate
286 M. Aluchna

culture or integrating into strategy perceive as an element for enhancing compet-

itive advantage. Well-structured and incorporated CSR concept develops relational
capital, improves and establishes dialogue with stakeholders that may positively
influence corporate performance both measured by financial and market indicators.
However, companies communicating their CSR performance may adopt various
strategies—from accidental initiatives or instrumental approach to true dedication
and incorporation in company functioning. The research conducted on the sample
of companies listed on the Warsaw Stock Exchange indicate several differences in
CSR practice between firms included in the RESPECT index and their peers which
stay out of the benchmark. Although these differences are identified they appear to
be less significant as expected, particularly in the case of banking as well as coal
mining and extraction industries. For other selected sectors these differences seem
to be more significant touching upon the core of the integration of the CSR concept
with business operation. In sum, RESPECT companies are found to pursue the
balanced strategy according to the typology proposed integrating CSR into strategy
and developing reporting and communication, while non-RESPECT companies
tend to realize instrumental strategy with focus on image improvement and com-
munication to stakeholders, with the banking and oil and extraction sectors as the
exception.

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Corporate Social Responsibility in Estonia:
Moving Towards a More Strategic Approach

Mari Kooskora

1 Introduction

In my previous publication in the CSR Europe book (Kooskora, 2004) I have

written that although being involved in CSR activities and understanding the
importance of ethics and responsibility in business during the Estonian Republic
in between two World Wars (1918–1940) and earlier, the occupation by Soviet
Union, forced planned-economy and nationalisation of all business enterprises had
left significant traces in our people’s morality and attitudes. It was argued that for
Estonian people ethical and corporate social responsibility (CSR) issues were
relatively new, as after restoring the country’s independence in 1991 our state
and businesses had to struggle for surviving and building up a successful economy.
At that time most business leaders preferred financial success over ethics and CSR
seemed to be something irrelevant and unimportant.
By focusing on increasing the economic growth and creating a favourable
business climate to attract foreign investments, being very flexible and open,
developing and implementing several e-solutions, Estonia was able to gain recog-
nition and relatively high international ratings and become known as a e-country.
Considered something of a laboratory or incubator, where radical and even extreme
changes can be made very quickly Estonia is a country where, under the guidance of
young and ambitious leaders, who were not tainted by the previous occupation
regime and were less burdened by the pains of history, it was possible to embark
upon the most radical version of ‘shock therapy’ in all of Central and Eastern
Europe. These rapid and radical changes, moving out of the former Soviet Union’s
sphere of control and implementing reforms that supported free-market entrepre-
neurship made the country a fore-runner among the new member states of the
European Union, with average GDP growth of 7 % per year since 2000.

M. Kooskora (*)
EBS Centre for Business Ethics, Estonian Business School, Tallinn, Estonia
e-mail: [email protected]

© Springer International Publishing Switzerland 2015 291

S.O. Idowu et al. (eds.), Corporate Social Responsibility in Europe, CSR,
Sustainability, Ethics & Governance, DOI 10.1007/978-3-319-13566-3_16
292 M. Kooskora

At the same time it seems that in several cases while making those rapid and
radical changes we had forgotten ethics and ethical behaviour, caring for others and
taking responsibility, which created many problems on personal, organisational and
societal levels. During this building and starting up process our political and
business leaders as well as society were neither ready to think about the issues of
ethical business or corporate social responsibility nor did they consider the impor-
tance of these topics in their action.
Doing actively research in this field and taking a more holistic approach by
analysing the business environment from three angles e.g. corporate governance,
corporate social responsibility and ethical leadership I identified several stages of
corporate moral development (CMD, see Kooskora, 2008a) among Estonian busi-
ness organisations in 1985–2005. The analysis of the study showed that corporate
morality in the majority of Estonian business organisations developed from a
double morality stage in the period of socialist erosion through an ethical vacuum,
instrumental and legalistic stages to a responsive stage emerging during EU acces-
sion in 2004 and 2005, however the higher stages in the Reidenbach and Robin
(1991) CMD model (emerging ethical and developed ethical) were not detected in
the Estonian business community during the period under analysis.
The study also revealed that the changes in CMD levels until the year 2005 were
caused mainly by external sources where especially the political and economic
factors played the most significant role, while internal forces, different stakeholder
expectations and social environment had less impact. It was concluded that from a
historical viewpoint, there had been a clear progress in considerations of ethics and
responsibility in the Estonian business community, and during a 20-year period
under examination, the Estonian business community had reached the stage where
ethical statements and concerns were understood as a useful tool for creating a
positive image and regarded as valuable when profitable.
However our more recent studies (Kooskora, 2014; Kooskora & Vau, 2011)
show that today the social environment and expectations from different stake-
holders and the society have became important triggers why organisations and
their leaders start considering ethics and responsibility in their business activities.
Today the situation is depending much on the organisational leaders’ readiness and
willingness to understand the organisation as a part of the society and wider
environment.
The purpose of this paper is to discuss the further developments of ethical and
responsible business in Estonia and to find out whether the approach to ethics and
responsibility has become more strategic among Estonian organisational leaders
during last decade. The paper is based on the results of several studies conducted by
me and my colleagues during recent 10 years and for analysis I have integrated two
development models, describing the stages of corporate moral development and
strategical corporate responsibility. A more detailed analysis focuses on the aware-
ness and understanding of ethics and responsibility in business among
organisational leaders and CSR activities of the organisations that have taken part
in the Responsible Business Index study in Estonia in 2009–2012.
Corporate Social Responsibility in Estonia: Moving Towards a More Strategic. . . 293

2 Ethics and Responsibility in Business and Development

Models Used in the Study

Based on a suggestion by several researchers in the field of business ethics and

corporate responsibility (CR) (e.g. Carroll, 1995; Freeman & Liedka, 1991; Free-
man, Wicks, & Parmar, 2004; O’Malley, 2003; Paine, 1997; Visser, Matten, Pohl,
& Tolhurst, 2010), it is assumed that the integration of ethical and responsibility
standards into business is not only preferable, but also necessary for long-term
organisational survival. Corporate governance should be seen as an essential
mechanism to help the company to attain its corporate objectives and this includes
corporation’s responsibilities towards its different stakeholders (Freeman & Evan,
1990, see also Kooskora, 2006, 2008b). Strong emphasises have to be put on
relationships with important stakeholders and how the organisation copes in man-
aging these relationships (Carroll, 1991; Freeman, 1997; 2000).
It can be argued that there are many different approaches to CSR and CR
(Aupperle, Carroll, & Hatfield, 1985; Blowfield, Blowfield, & Murray, 2008;
Carroll, 1979; Elkington, 1998; Freeman, 1995; Friedman, 1970; Näsi 1995;
O’Malley, 2003; OECD 2001; Porter & Kramer, 2011; UN Global Compact,
2009) but at the core of the concept of CR we can see the responsibilities of
organisations towards people, society and the environment that are affected by
their activities. In today’s world of intense global competition, it is clear that CR
can be sustainable only as long as it continues to add value to corporate success. It
must be observed, however, that it is society or public that plays an increasing role
in what constitutes business success (see Carroll, 2008) and companies that deal
with their CR in a forward-looking manner ensure that it becomes an integral aspect
of their corporate governance (Aldrighi, 2009).
There appears to be a growing acknowledgement in the business community of
the need for ‘good’ leadership, implying both effectiveness and morality (Ciulla,
2001, 2004). Aronson (2001) believes that since appropriate values are at the root of
moral conduct, the business leaders of today must possess a set a values that will not
only enhance a favourable perception in the eyes of both internal and external
stakeholders (Donaldson & Preston, 1995; Freeman, 1984), but also lead to greater
effectiveness and efficiency of organisational members (Brown & Mitchell, 2010;
Trevino, Brown, & Hartman, 2003). Similarly Carroll (2010) highlights the impor-
tance of improving the organisation’s ethical culture and points to the messages and
information that managerial leaders transmit foremost through their behaviours and
activities, sometimes even unintentionally.
The classification of organisations in ethical terms has been attempted by a
number of writers and inspired by the work on individual moral development by
Kohlberg (1969, 1984). In 1991 Reidenbach and Robin presented the idea that
corporate moral development changes from strictly self-interest and self-serving to
a broader consideration for others and society (Reidenbach & Robin, 1991). The
authors developed a model of Corporate Moral Development (CMD) to illustrate
294 M. Kooskora

the balancing of business and ethics in organisations suggesting that as individuals

can be classified within a stage of moral development so too can organisations.
Reidenbach and Robin (1991, 274) suggested that an organisation’s stage of
moral development is signalled by corporate behaviours and identified five stages
of moral development named as: amoral, legalistic, responsive, emerging ethical
and developed ethical. These stages exhibit the morality/moral maturity of an
organisation through certain behaviours, attitudes, values, corporate culture and
explicit or implicit artefacts. The CMD model suggests that corporations that give
profit higher preference than ethics can be found in the first stages, and corporations
that give ethics priority over profitability are found in the higher stages of moral
development.
More recently the discussions about ethics and responsibility in business have
been directed to the organisational sustainability (e.g. Hollander & Breen, 2010;
McElhaney, 2008) and strategic corporate responsibility (SCR, Jonker & de Witte,
2006; Mele & Guillen, 2006; Porter & Kramer, 2006; see also Kooskora & Vau,
2011). Moreover the question is not any more about ‘whether or not to engage in
CSR, but how to do it smarter and more strategically, how to integrate it into day-to-
day business strategies’ (McElhaney, 2007).
Similarly to Reidednbach and Robin (1991), Zadek (2004) argues that most
corporations pass through certain stages as they move toward CR. He identified five
stages of CR organisational learning that the companies adopt as they mature in
understanding and practicing CR, and called these as following: defensive (when a
company denies CR practices, outcomes or responsibilities); compliance (company
adopts policy-based compliance approach as a cost of doing business); managerial
(embed the CR issue in the core management practices); strategic advantage
(integrate CR into their core management practices) and civil (company promotes
broad industry participation in CR, see also corporate citizenship, Matten & Crane,
2005).
Additionally Zadek (2004) combined those five stages with four stages of
intensity to measure the maturity of CR issues and public expectations around
those issues. These stages are called as: latent (where there’s awareness of CR
issues only among activists); emerging (awareness seeps into political and media
communities); consolidating (much broader awareness id established) and
institutionalised (where’s there a tangible reaction from powerful stakeholders).
Combination of those stages shows the organisations which stakeholders and issues
pose the greatest opportunity and danger (see Werther & Chandler, 2010, 37).
McElhaney (2008, 22) expanding upon Zadek’s (2004) stages of learning
described the CR maturation process, where company’s CR growth takes place
from philanthropic activities (i.e. donations and grants) through transactional
(i.e. event sponsorships, cause-related marketing, employee volunteerism) toward
integrative stage, what is characterised by joint advocacy and joint action, deep
partnerships, clear financing principles and changing rules of the industry. The need
to move forward from philanthropic activities to more strategic CR approach was
also highlighted by Halme and Laurila (2009), moreover, just organisation’s views
on issues grow and mature, so does society’s. Therefore, in order to capitalise fully
Corporate Social Responsibility in Estonia: Moving Towards a More Strategic. . . 295

Fig. 1 Integrated model of corporate moral development in Estonian business environment

context (Kooskora 2008a; 2010) and stages of CSR (Zadek, 2004)

on the benefits to themselves and society, organisations have to take a more

strategic CR approach.
In order to characterise the more recent developments within Estonian business
society and whether it is possible to find organisations that have reached to the
higher levels of these development models I integrated the modified conceptual
model of CMD in transition business community’s context (Kooskora, 2008a) with
the model of corporate responsibility (CR). Organisational learning by Zadek
(2004, 129) and CSR Maturation process by McElhaney (2008, 22). The model
can be seen in (Fig. 1). The analysis is based on the results of several studies
conducted among Estonian business organisations and organisational leaders
within last 10 years.
Whereas the lowest stages (double morality and ethical vacuum) in the CMD
model were characteristic only to the transitional context of Estonian business
community, these are excluded from our current research. Therefore the starting
point is the year 1995, when the political and economic situation were more stabilised
and survival was not the main concern for business organisations any more. However
as the organisations are strongly influenced by the economic environment, the brief
overview about Estonian business context is given in the next section.

3 Context of the Study

By 1995 the period of privatisation in Estonia was predominantly over and the first
legislative framework concerning the operation of corporations, in the western
sense, had started to develop. At that time the Asian and Russian crises presented
new demands on economic activities and economic thinking as a whole (Terk
296 M. Kooskora

et al. 2004). Estonian economy started to boom and the number of business
enterprises increase considerably, the main business purpose was clearly earning
profit, preferably fast profit and thus attaining success, the activities focused
basically on short-term interests—thinking no more than 1–3 years ahead (see
Kooskora, 2008b). The indicators of success at that time were a rapid growth of
profit and other growth indicators (such as cash flow, turnover, growth of market
share, etc.).
In 2000–2004, the attention turned more to long-term perspectives, planning
periods became a minimum of 5 years, and 10 or even more years were common.
The priority was concentrating more on the enterprise’s ability to stay in the market,
resisting the competitors’ pressure and meeting the customers’ increasingly com-
plicated demands. The success was determined by the export potential and sustain-
ability of the organisation. That reflected the tendency that the general economic
environment was moving towards increasing stability, which enabled the corpora-
tions to operate in a more balanced manner. However, the environment was largely
influenced by Estonia’s accession to the EU and several business representatives
expressed their concerns related to new EU regulations on business organisations
(see Kooskora, 2006, 2008b).
After joining EU in 2004, Estonia continued to enjoy rapid economic growth,
underpinned by strong macroeconomic fundamentals, EU membership and appro-
priately flexible market structures. In 2000–2008, Estonia’s economy saw an
average growth of 7 % per year, which placed Estonia among the three countries
in the EU with the fastest growing real GDP. The business climate remained
attractive and brought in high foreign investments, and created strong business
ties especially with Nordic countries and Germany. During that period, Estonia
took a big jump in the improvement of living standards, increasing its GDP per
capita from 45 % of the EU27 average in 2000 to 67 % in 2008 (Dynamic Economy,
2014). This rapid growth and EU membership had significant impact on labour
market. The rate of unemployment rate fell remarkably and it made the businesses
to start competing for best talents and qualified employees.
The favourable economic situation changed in 2007. The banks tightened the
granting of credits, consumers’ confidence diminished, and the real estate market
declined. Fast growth of income persisted, but in the beginning of 2008 insecurity
increased, which was accompanied by a decrease in private consumption. Private
sector investments also started to decrease, and the downward trend steepened. In
autumn 2008, the economic crisis culminated, causing a rapid collapse of export
capacities, worsening the availability of credit money, and increasing the insecurity
of companies and households even more. The overall decrease in GDP growth rate
for 2009 was 14.1 % (Dynamic Economy, 2014). Thus the financial and economic
crises hit Estonia even more hard than other EU countries, the unemployment rate
shot up, and substantial emigration followed. The recession of 2008–2009 reduced
the creation rate of enterprises in Estonia and lead to more companies going out of
business than in previous periods.
Restoring from the crisis has not been easy, several fiscal measures were used,
including increasing the value added tax, social security contributions and excise
Corporate Social Responsibility in Estonia: Moving Towards a More Strategic. . . 297

taxes, and a part of the private pension payments was diverted to the government
(Staehr, 2013). In summer 2009 a new Employment Contracts Act (ECA) came into
force and provided a more employer-friendly and flexible set of rules, giving
employers much more freedom to reduce the wages of employees or cancel
employment contracts due to unfavourable economic circumstances, including a
decrease in contracts or clients. The new ECA followed the “flexicurity” principles
and made it much easier to lay off employees, especially for economic reasons,
which were very common during the recession period the whole country was
struggling through (see also Kooskora, 2012, 42).
The measures were effective the economic growth turned positive in the 2nd
quarter of 2010 and the annual GDP grew by 2.6 % compared to the previous year.
In 2010, the statistics of business demography improved by a small degree, and the
creation rate of new Estonian enterprises was 12 %, with average number of
employees 1–5, whereas more than 60 % of new enterprises started without any
employees. From the beginning of 2011 Estonia belongs to the euro-zone, adopting
euro boosted the comfort and security level of the country’s EU trading partners and
business ties became even more tighter. According to Statistics Estonia, in 2012 the
annual GDP increased by 3.9 % (in 2011—9.6 %) compared to the previous year.
Today, more than 71 % of the Estonian GDP is derived from the service sectors,
industrial sectors yield 25 % and primary branches (including agriculture) approx-
imately 4 % of the overall output. There are 58,347 enterprises operating in Estonia,
among those 99.9 % are SMEs and 70 % are active in service sector. The corner-
stones of Estonian economic development are openness, liberal economic policy
and proportional tax system with 0 % tax on reinvested profits. International
organisations like World Bank, World Economic Forum, The Heritage Foundation
and others have acknowledged Estonian economy as very open and competitive.
Thus, Estonia has been able to create a rather business-friendly climate, however
there’s a need to safeguard the external competitiveness, address skills mismatches
and accelerate human capital accumulation (IMF 2013, 17). As highlighted in
‘Estonia’s 2020 Competitiveness Strategy’ knowledge-based activities will hold
the key to move up the export value chain, therefore more attention and effort has to
be put on managing talent and developing training programs in Estonia.

4 Methodology of the Study

In order to characterise the more recent developments and find out whether there are
companies who can be characterised as being Emerging Ethical and Developed
Ethical in Estonian business community, thus on the higher levels of the develop-
ments models, a new study is conducted among Estonian business leaders and
organisations who took part in Responsible Business Index (RBI) study from 2009
to 2012 (csr.ee homepage). The research methods are combined, including analysis
of the RBI reports, the organisations’ home-pages, annual reports and interviews
and personal conversations with organisations’ representatives.
298 M. Kooskora

The purpose of RBI study conducted among Estonian organisations is to analyse

and evaluate their ethical and responsible performance and to assist companies in
defining, evaluating and monitoring their economic, social and environmental
impact. RBI enables companies to receive feedback and compare their results
with those of other companies, thus identifying the future needs for development.
So far the RBI study has been conducted six times; index was launched in autumn
2007 with an aim to help businesses to improve their economic, social and envi-
ronmental impacts as well as to provide better information to their stakeholders. I
have been involved in the RBI study since its creation, as the expert, consultant,
trainer and a member of a research team, who conducts this research among
Estonian organisations, ranks them publicly based on their CR performance and
gives detailed feedback to the participating organisations. The purpose of the given
feedback is to help organisations in integrating ethics and responsibility in their
daily business activities and to take a more strategic approach in CR activities.
The RBI study has a 4-part structure: questions about business strategy (20 % of
the total 100); integration of CR principles (20 %); issues management (including
areas such as community, natural, working and market environments, all together
40 %), and stakeholder reporting and communication (20 %). The maximum score
100 % demonstrates the result which can be regarded as the ideal in our Estonian
context at that particular time, considering our economic, political and social
environment and the stages of corporate moral development (see Kooskora, 2006,
2008a, 2009).
In the first section—strategic management—we include issues that help to find
out the linkage between CR activities and strategic management, corporate objec-
tives and competences (see McElhaney, 2007, 2008; Porter & Kramer, 2006;
Schreck, 2009), and existence of CR principles in company’s vision, mission and
core values (see Hollander & Breen, 2010; Werther & Chandler, 2010; Zadek,
2004). The questions also bear on issues such as making strategic decisions
(e.g. Mele & Guillen, 2006); involvement of senior management and the board;
and following CR principles during crisis situation (see Googins et al. 2009; Hansen
and Reichwald 2009) and understanding and considering the organisation’s most
significant impact factors.
The purpose of the second section—measuring performance impact and engag-
ing stakeholders—is to find out company’s awareness of their impact, initiative in
enhancing CR issues, awareness of the important stakeholders, considering their
expectations, engaging in CR discussions, and also raising awareness about CR and
involvement in dialogue with the community (cf. McElhaney, 2008; Milliman
et al. 2008; Zadek, 2004). Questions also include issues and leadership and risk
management (see Weber and Cross 2008).
The third section—CR activities and issues management—deals with concrete
CR activities and whether these are performed according to CR principles, corpo-
rate values, mission and vision. These questions enable to analyse the linkage
between corporate activities and CR features in different areas and environments,
including community, natural, working and market environments (e.g. Jonker & de
Witte, 2006). This section gives information about how relations with stakeholders
Corporate Social Responsibility in Estonia: Moving Towards a More Strategic. . . 299

are managed on daily bases and whether and how they are engaged in organisation’s
activities.
The fourth section is about measurement and communication of CR activities.
The purpose is to find out how are CR activities towards community, natural,
working and market environments measured, at what extent are these communi-
cated, the scope of CR reporting, existence and application of CR standards and
certifications (e.g. Cramer 2005; McElhaney, 2008; Visser et al. 2010). With a
purpose to investigate whether the participating organisations have used CR prin-
ciples in widening product range or creating new products or services to tackle or
offer solution to some social problems; find out the linkage between and impact on
CR activities and product and process innovation (e.g. Halme & Laurila, 2009;
Porter & Kramer, 2006).
In order to keep the study method and also evaluation criteria updated, we have
made slight changes each year—some particular topics added and/or omitted
(related to innovation, crisis and corruption) and some scales changed; the require-
ments and evaluation criteria made more demanding, however these changes have
not been significant and thus not hindering comparison of the results of different
years.
The participation in RBI study is based on a voluntary basis and requires
companies to fill out the form assessing their CR strategy, integration, areas
management and communication, bringing concrete examples, supporting evi-
dence, to justify the answers, and referring to publicly available information. The
results are then assessed by the assessment team and as a reward each company gets
a detailed feedback highlighting key CR successes as well as improvement areas.
As the study method is rather long and the questions are detailed, answering these
needs commitment and time, therefore a group of the organisations’ representatives
is involved, including CEOs and other relevant members of the management board.
This has allowed us to collect oral and written material of thousands of pages full
of real-life examples and descriptions of principles and activities from primary
sources of those organisations who have taken part in the RBI study since the year
2007. In order to reach to the valid results all response forms are evaluated by at
least two independent assessors, our research team members, who also check the
information organisations have given about themselves and the results of the best
10–15 organisations are additionally checked by the independent external auditors.
In 2009—49 and in 2010—55 in 2011—60 and in 2012—63 organisations were
ranked publicly based on the expert analysis of the study results, responses from the
organisations’ representatives, evaluation of the organisations’ activities, analysing
the organisations’ web-sites and publicly available information about their perfor-
mance and activities. The combined method and triangulation are used in order to
increase the reliability and validity of the study about this very complex CR area.
300 M. Kooskora

5 Brief Overview of the Study Results

Based on study results we can state that ethics and responsibility in business has
definitely gained more attention among Estonian business organisations, moreover
the recent years, and times of economic crisis and recession have even increased the
importance for ethical and responsible considerations within business activities (see
also Kooskora & Vau, 2011).
We can see that the number of participating companies has increased every
year—thus there are more companies, who have become aware and interested about
ethics and responsibility in business and are willing to evaluate themselves pub-
licly. Moreover the number of companies who have taken part in the study, but have
not submitted the results for public ranking has increased even more significantly,
reaching over 200 companies by 2013 (CSR Foorum, 2013; Siller, 2014).
In the first years the overall results of RBI study were published in the special
issue of our business newspaper ‘Äripäev, Juhtimine’ (‘Business Day’, issue ‘Man-
agement’) and the scores were publicly available to everybody. During last years
we have changed the evaluation and publishing system, and now we divide the
participating companies into four categories based on their results. The companies
who score over 70 % get the quality label—RB certificate they can use for 1 year,
whereas the ones who score over 90 % get Golden certificate, over 80 % Silver
certificate and over 70 % Bronze certificate. Today only these companies who
receive the quality label—RB certificate are made public, with indication of the
quality certificate level. The average total score of all participants in 2009 was 57 %
out of 100; in 2010 it was 62 %, in 2011 64 % and in 2012 65 %, thus slight increase
by each year and we are able to see some development in most of the aspects of
responsibility. Out of four main sections of the RB Index (business strategy;
integration of principles; issues management; and measurement, reporting and
communication) the issues management part gets the highest results—71 %–72 %
of maximum 100 in most of the studied years. The weakest section, also in all years,
is measurement, reporting and communication (48 % in 2009 and in 2010, 54 % in
2011 and 55 % in 2012). Here we can say that effectiveness of responsible
initiatives is not yet being evaluated and even if it is done, the results are not
communicated to the main stakeholders (cf. McElhaney, 2008). According to the
results it can be said that for our participating companies it’s still difficult to
integrate principles of CR among their employees (52 % in 2009; 54 % in 2010;
61 % in 2011 and 63 % in 2012). Although it is possible to see clear improvement
also here, CR issues should be taken more into account at remunerating or evalu-
ating the results of the employees (cf. McElhaney, 2008; Zadek, 2004). However,
we are able to find several great examples in issues management (i.e. concrete
initiatives in community, natural, working and market environment), and most of
the participants of the RB Index are doing well here. In 2009 and also 2012 the
strongest results are achieved in the working environment (67 % in 2009; 71 % in
2010; 73 % in 2011 and 77 % in 2012), while in 2010 there is greatest development
in market environment (62 % in 2009 vs. 76 % 2010; 74 % in 2011 and 77 % in
Corporate Social Responsibility in Estonia: Moving Towards a More Strategic. . . 301

2012)—when the companies contributed to ethical advertising and marketing,

cooperation with suppliers for better and environmentally friendly performance.
The lowest results, although with clear improvement, are received in measuring,
reporting and communication (47 % in 2009 and 48 % in 2010; 54 % in 2011 and
55 % in 2012). From here we can say, that the awareness of this area is still very
low, and reporting about different impacts of companies’ performance seems to be
uncommon to majority of companies who took part from this survey. Moreover,
there are still only few international companies in Estonia who use Global
Reporting Initiatives (GRI), while in other countries it’s already common practice
or rapidly gaining increasing popularity (see Visser et al. 2010). Only some
companies among our respondents have created own CR and sustainable develop-
ment report and when we investigated more about those backgrounds, we found
out, that the need for publishing these reports comes directly from the international
partners. Albeit the quality of the reports is not yet very high, we still consider this
an important development in this area.
Although there are small differences in the results during the years 2009–2012 as
seen in the previous section, we can argue, that in most aspects the results are
relatively similar. Furthermore, in all those years the top 10 organisations are doing
visibly better in almost all areas and their approach is also much more strategic than
in other participating companies. Moreover, even when the results seem to be a bit
lower, these companies have recognisable substantial development in their
approach to CR. Thus, even we cannot generalise our results to all Estonian
organisations, which are practicing CR, we believe that the results can point to
some specific trends and developments especially among those companies who
have already shown their involvement in CR and want to develop further, therefore
in the next section we pay more specific attention on the results of those companies.

6 Linking CR Activities and Principles to Strategic

Management

The majority of participating organisations have their CR principles manifested in

core values, mission and sometimes also in vision, furthermore, among the leading
10 companies CR principles are clearly stated and those companies have been
skillfully able to link CR principles to their core objectives. CR principles are
defined and published in written documents (i.e. code of ethics, corporate policies,
annual reports), and some have written a separate document about CR principles.
When we look closer to the results among ten leading companies, we see that the
activities are planned well and related to the activity fields, corporate competences,
and know-how of the organisation (cf. Porter & Kramer, 2006; Schreck, 2009).
These companies have also included CR principles to their value statements, which
are written down in documents that are available internally and publicly to all
interested stakeholders. Here we can refer to the company Coca-Cola HCB Eesti
302 M. Kooskora

AS, whose CR activities are thoroughly thought through and applied to corporate
strategy already since 2009.
More than half of participating companies have defined their CR principles in
written documents, such as corporate code of ethics, corporate policy statements,
annual reports, guidelines and various program documents. Few of the participants
have also created a separate document for CR principles and guidance of CR
activities of the organisation (for example Swedbank, being the first among Esto-
nian organisations who has implemented their own CR policy and hired CR
manager, who coordinates all activities related to CR).
While defining the corporate CR principles at least top management is involved
in almost all participating companies. 25 companies achieved almost maximum
score as they have involved top management, line managers and also all interested
employees. A few companies have also engaged owners, associations, consultants
and NGOs in the process (for example Viru Keemia Grupp, who hired an interna-
tional consultancy bureau for creating the CR and sustainability report).
Our study reveals further that companies who belong to the top 10, whose impact
is wider and who are the fore-runners in their activity field, have also engaged more
stakeholders and are more active in CR. Moreover their principles are clearly more
strategically implemented than companies who have achieved lower scores
(cf. Blowfield et al., 2008; Zadek, 2004). These are also the companies who have
benefited more from their CR activities than other participating organisations
(cf. Porter & Kramer, 2006).
However, we found out that in just few companies the CR principles and
activities are discussed during the senior management or board meetings, and
stakeholder meetings, involving senior executives, owners and shareholders, at
the same time in top 10 organisations these issues are discussed and decisions
made at the highest level, similarly to all strategically important decisions (cf. Mele
& Guillen, 2006).
In 2009 and 2010 we also asked respondents about their performance and
keeping to the CR principles and core values during recession/crisis situation, and
this question got the highest results, with scoring so high as 82 % of the maximum
100 in 2009 and 84 % in 2010, and in several organisations (mainly in top
10 companies) the commitment to these activities was even deeper and more
proactive than earlier. This result allows us to note, that when the companies
have already defined their CR principles and activities, then in most cases they
also perform accordingly (cf. Googins et al. 2009; Hansen and Reichwald 2009)
despite of the difficulties and changed environment.
Moreover, it was also revealed, that due to the fewer resources, top companies
made cuttings in their charitable and philanthropic expenses, but did not made any
changes in their CR principles and planned CR activities. This proves that the
awareness of SCR has increased especially among the top leading companies and
organisations start to value these principles more than just want to gain public
recognition and improve their reputation through philanthropy (cf. Halme &
Laurila, 2009; McElhaney, 2008).
Corporate Social Responsibility in Estonia: Moving Towards a More Strategic. . . 303

Although, the results of our research apply only to the organisations who took
part in our study, these describe some specific trends and activities characteristic to
those companies who are already familiar and implemented CR principles in their
work and have demonstrated their willingness to develop further in CR area.

7 Results According to the CR Quality Levels

When looking at the overall results, it can be seen that besides the fact that general
score has increased each year, the gap between the scores of top 10 companies has
decreased. The results show that when the number of companies with Golden RBI
level, ‘where CR is part of business model and the organisations’ DNA’, has
remained same during studied years, the number of companies reaching to the
silver level has increased significantly. Which allows us to state that those compa-
nies’ approach; has become more strategic and their activities have also become
better related to core business. Each year we have seen clear development in all
aspects and the competition among top companies has become stronger. In those
companies the approach is now more strategic, awareness about CR has increased
and ethical principles are better formulated, the goals are clearer and evaluation
systems more developed.
Besides this the strongest part has been the issues management, whereas the
level of working environment has developed most. This leads us to conclude that
today as the companies have developed further, more attention is paid on
employees’ welfare and working conditions at least in those companies who have
taken part in the RBI study.
As the real implication of organisations’ ethics and responsibility stems from
inside to outside (Kooskora, 2013) we can take the working environment as one
aspect that illustrates the development from the previous study quite well. When in
2005 it was rather rare to pay attention to employees’ well-being and workplace
environment and the managers expressed their ideas that ‘it should be important to
start considering employees more in the future’ (Kooskora, 2006, 193), then today
the consideration and engagement of internal stakeholders is regarded as essential
for good organisational performance.
It is very positive to note that in 2012 contributing to the development of people
is considered as the priority activity (average score highest 92 %); also safety and
healthy lifestyle issues are regarded as important (87 %) and finding the best work
and personal life balance is gaining importance (81 %). Today in most companies
who have participated in our study flexible working hours for office jobs and
considering employees’ interests in agreeing on monthly schedules is considered
elementary. However at the same time we see much room for improvement in
involving employees in discussions about the companies’ general future, sustain-
ability and workplace related questions; equal treatment in recruitment (76 %) and
on workplace (65 %) for different groups and outpace programmes (66 %).
304 M. Kooskora

According to the RBI study results the integration of CR principles has steadily
increased and CR is becoming more strategic and activities are better related to core
business throughout the companies’ performance. There is an increasing number of
organisational leaders who have started to approach ethics and responsibility in
their organisations more strategically and who regard these principles as a part of
everyday and normal business activities. Thus we can conclude that when in 2005
the Estonian business community did not reach to the higher levels of CMD model,
then now we can find increasing number of organisations who can be described as
being ethically developing and for whom expectations from the society and differ-
ent stakeholders and also good relations, cooperation, trustworthiness and capabil-
ity to act as a trusted partner on the international business arena are regarded as
most important values that shape their business activities. The trend is more
towards connecting responsibility strategically to the core activity, products and
services, competence and know-how of the business.
Moreover at least those organisations which belong to the CSR network (CSR
Forum Estonia) and take part in the RBI study are focused on developing further in
this area and enhancing the awareness of ethics and responsibility in business
within their industries and activity fields. Representatives of these organisations
often take the leadership role and are willing to share their principles and experi-
ences with others; they are involved in training activities and make presentations at
conferences and in media.
However broad range CR leadership activities and stakeholder engagement can
be seen only among the leading top 10 organisations who have participated in the
RBI study; organisations who have reached to the silver level of RBI are those who
see strategic advantage in being ethical and responsible in their business activities.
Many of those companies have close partnerships with Nordic and Scandinavian
companies and they have starting to realise that in order to do better in business
their behaviour needs to be ethical and they have to take responsibility of their
impact to the society and environment.
The study revealed also that, only the top 15 of the participating companies (who
reached to the Gold and Silver levels) have engaged the management board in
defining CR principles and in CR activities, which is considered as one of the
crucial elements of SCR. The situation is not much better with communication; the
study results show that in majority cases communication takes place in form of
sharing information about the CR principles and values, however communication of
CR activities is still very rare.
Organisations who have reached to the bronze level in the RBI study have started
to integrate ethics and responsibility into their management practices. Those orga-
nisations have taken heightened responsibility towards their employees and believe
in the importance of healthy society. They have also started to create their own
standards and formulate core principles that involve considerations of ethics and
responsibility in their activities.
At the same time in about half of companies who have taken part in RBI study
just some specific issues are regarded important and discussed and decided more
strategically, sometimes also involving some stakeholder groups in the process.