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Dr. Ian Harwood Lecturer in Management School of Management, University of Southampton

Developments in Supply Chain Management: Mandating compliance for CSR in the supply chain – RIP CSR? Hot topic seminar, University of Portsmouth, 29 th October 2008. Dr. Ian Harwood Lecturer in Management School of Management, University of Southampton

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Dr. Ian Harwood Lecturer in Management School of Management, University of Southampton

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  1. Developments in Supply Chain Management: Mandating compliance for CSR in the supply chain – RIP CSR?Hot topic seminar, University of Portsmouth, 29th October 2008 Dr. Ian Harwood Lecturer in Management School of Management, University of Southampton Room 3019, Building 2, Highfield, Southampton, SO17 1BJ Email: iah@soton.ac.uk, Tel: 023 8059 7789, Fax: 023 8059 3844

  2. Beijing, China – Oct. 22, 2008“Wal-Mart Announces Global Responsible Sourcing Initiative at China Summit” • At the Summit, Wal-Mart laid out a series of requirements for companies who want to do business with Wal-Mart, including: • Required demonstration of compliance with environmental laws and regulations • Partner with suppliers to improve energy efficiency and use fewer natural resources • Higher standards of product safety and quality • Greater transparency and ownership http://walmartstores.com/FactsNews/NewsRoom/8696.aspx

  3. Hot topic for discussion • Reputation risk and supply chain management • What is the impact of mandating CSR compliance along the supply chain?

  4. Key influences Lobbying Purchase power Regulations Taxation Legislation Business Government Political process Voting rights Interest groups Contributions Political influence Taxation Legislation Purchase power Shareholding Interest groups Boycotts Protests Advertising Marketing Public Relations Public Adapted from Carroll & Buchholtz (2006)

  5. Corporate Social Responsibility Terminology • 20 different terms uncovered (so far) • Numerous terms exist for CSR in supply: • Green Supply Chain Management (Srivastava, 2007) • Environmental Purchasing (Carter et al, 2000) • Purchasing Social Responsibility (Carter, 2005) • Ethical Sourcing (Roberts, 2003) • Socially Responsible Purchasing (Maignan et al, 2002)…

  6. Definitions • Corporate Social Responsibility (CSR) is regarded 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” (European Commission, 2001, p.8). • “a commitment to improve community well-being through discretionary business practices and contributions of corporate resources” (Kotler and Lee, 2005, p.3) • “voluntary corporate commitment to exceed explicit and implicit obligations imposed on a company by society’s expectations of conventional corporate behaviour” (Falck & Heblich, 2006) Contribute to community, be philanthropic CSR Discretionary Ethical Do what is right, avoid harm Legal Obey the law Friedmanite view Economic Make a profit Source: Adapted from Carroll (1979)

  7. 1. Fund staff for voluntary work 2. Support fresh water schemes 3. Pass on your technology 4. Look after employee health 5. Encourage customers to raise funds 6. Campaign sponsorship 7. Set up a charity 8. Recycle office supplies 9. Support a conservation scheme 10. Cycle to work 11. Cut delivery miles 12. Work with local producers 13. Spread the word in schools 14. Help people with disabilities 15. Set your staff a challenge 16. Share your facilities 17. Tap into eco-friendly workers 18. Purchase from sustainable stocks 19. Protect wildlife 20. Serve Fairtrade 21. Reward greener customers 22. Use ‘green’ suppliers 23. Educate your clients & staff 25. Plant a tree 26. Reduce carbon footprint Examples of CSR Source: adapted from Mullen (2008)

  8. Study 1: A snapshot of progress • ‘Embedding Corporate Responsibility into Procurement: a force field analysis’ (Harwood, I.A. & Humby, S.) • Explanatory cross-case analysis (Yin, 2003): 9 organisations • Public (3) and private (6) mix • Mainly services rather than manufacturing • Utilities, media, pharmaceuticals, communications, construction, and central government departments and agencies. • Semi-structured interviews with senior managers (procurement or CSR).

  9. Findings • Wide range of levels in CSR activities and understanding. • 5 case organisations were accommodative towards CSR, the others wanted to proactively get involved in CSR (Maignan, et al., 2002). • Minimal integration between ‘mainstream’ (VFM) activities and CSR-related initiatives. • Specific concerns and issues: 1) Vocabulary 4) Integration 2) Measurement and data integrity 5) Data sharing 3) Risk Management 6) Motivation and Perception

  10. Embedding CR further in supply • “Our outward image is good but internally we still have major challenges in changing the mind set of many procurement people” • “We only look one step down the supply chain – it wasn’t thought important or possible to go beyond the immediate supplier” • Assuming CSR is a ‘good thing’ (Carter et al, 2000; Carter, 2005) – how can CSR be further embedded into the procurement function?

  11. Driving Forces (+) for CSR • Positive environmental & social impacts • Potential cost savings • Benefits to company reputation (risk) • Increased market penetration • Staff performance increased through CSR • Enhancing supplier performance • Increasing interest in CSR • Up swell of public / customer opinion • Political drivers / trade offs • Increasing media / lobbyists activity • Compliance with standards / legislation / regulation

  12. Restraining Forces (-) against CSR • Cost of CSR / additional resources • Prioritising resources between competing CSR activities • Initiative overload (fads and fashion) • Cynicism / style over substance • Inertia / culture • ‘Not my problem’ syndrome • Limited success stories / sector specific • Limited reward mechanisms

  13. Restraining Forces (-) against CSR • Conflict between CSR and VFM in procurement decisions • Traditional procurement measurement systems • Competitive dynamics in a global environment • Problems over data integrity • Persistent stakeholder demands for profit • Uncertainty over what CSR entails

  14. Study 1: Summary & Conclusions • Most focus on one element of CSR • Many good examples… but also cynicism and confusion • Key actions include: 1) Reduce cynicism & inertia 4) Challenge reward structures 2) Increase data integrity 5) Investigate risk efficiency 3) Increase awareness/training

  15. Study 2: • ‘Attitudes of SME Owner/Managers Towards Supply Chain Pressures to Engage in CSR’ (Baden, D.A.; Harwood, I.A., Woodward, D. & Knight, A.) • Sample: EU definition of SMEs <250 employees, turnover <50 million Euros • Mixed methods • 25 exploratory interviews • 103 responses to a survey

  16. ‘Have you had to satisfy customers on the following issues?’ • Health and Safety – 67% responded often/sometimes • Environmental issues – 55% responded often/sometimes • Employees/staff issues – 43% responded often/sometimes • Social/community issues – 35% responded often/sometimes • Environmental issues included: • Environmental policies, ISO14001, compliance with WEEE, waste management and recycling policies. • Social issues included: • Equal Opportunities, Investors in People, or SA8000.

  17. Motivation to engage with CR • SME Owners/directors main driver of engagement with CSR which supports research showing values of SME owners are more closely aligned with their business behaviour. • Additional benefits for being environmentally responsible: • Increased reputation (87% said yes/probably) • Personal values (78% said yes/probably) • This supports view that intrinsic motivation is a key driver towards responsible business.

  18. Impact of increased compliance • Most happy to comply with criteria (environmental 82%), (social 55%). • Half indicated annoyance at extra bureaucracy • Over a third thought it would be a pointless box-ticking exercise. • A quarter would be put off tendering in future.

  19. 75%

  20. Imposed standard The ceiling effect (Michael, 2006) • SMEs believe voluntary effort to be the best way to encourage them to be more socially/environmentally responsible. • Fairly neutral regarding the benefits of regulation, and supply chain pressure. Level of environmental/social activity

  21. Hot topic for discussion • Reputation risk and supply chain management • What is the impact of mandating CSR compliance along the supply chain? • Conviction vs compliance CSR… the ‘ceiling effect’ • If CSR actions are mandated in the supply chain… does it spell the end for CSR? • Or… do we actually mean something other than CSR?

  22. Acknowledgements • ‘Embedding Corporate Responsibility into Procurement: a force field analysis’ (Harwood, I.A. & Humby, S.) – 2007 – The Achilles Group for funding • ‘Attitudes of SME Owner/Managers Towards Supply Chain Pressures to Engage in CSR’ (Baden, D.A.; Harwood, I.A., Woodward, D. & Knight, A.) – 2008 – ESRC funded • Next steps… • ‘The resilience of corporate responsibility activities in the face of major organisational change’ (Harwood, I.A.; Humby, S.; James, K. & Chick, G.) – 2009?

  23. Recent publications… • Baden, D.A., Harwood, I.A. and Woodward, D.G., (….) The effects of procurement policies on ‘downstream’ Corporate Social Responsibility activity: Content-Analytic insights into the views and actions of SME owner/managers, International Small Business Journal, (submitted) • Baden, D.A., Harwood, I.A. and Woodward, D.G. (2009), The effect of buyer pressure on suppliers in SMEs to demonstrate CSR practices: an added incentive or counter productive?, European Management Journal (in press) • Harwood, I.A. and Humby, S. (2008). Embedding corporate responsibility into supply: a snapshot of progress, European Management Journal, Vol. 26(3),pp.166-174. • Baden, D., Harwood, I.A., & Woodward, D. (2008), The impact of buyer pressure on SMEs to demonstrate CSR activities: evidence of the ceiling effect, EBEN-UK Conference, 1st-2nd April 2008, New Hall, University of Cambridge, UK. • Baden, D., Harwood, I.A., & Woodward, D. (2008), The effect of supply chain drivers on SMEs’ motivation to engage with CSR activities: a psychological perspective, AIB-UK & Ireland Chapter Conference (AIB-UKI), 28-29th March 2008, University of Portsmouth, UK. • Baden, D., Harwood, I.A. & Woodward, D. (2007) Attitudes of SME Owner/Managers Towards Supply Chain Pressures to Engage in CSR, British Academy of Management conference, 11-13th September 2007, University of Warwick, UK. • Harwood, I.A. & Humby, S. (2007) Embedding Corporate Responsibility into procurement: a force field analysis, 16th Annual IPSERA Conference, 1-4 April 2007, University of Bath, UK. http://sotoncsrcommunity.wordpress.com/

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