Silence is Golden
In October, a conference was held at INSEAD outside Paris to discuss the findings of a major EU-funded study on corporate responsibility that had been coordinated by the European Academy of Business in Society (EABIS). It focused on the extent of alignment between stakeholders views and demands for corporate responsibility and companies own views on that and whether more alignment correlated with business performance.38 The summary report concluded "those that have established processes for managing dialogue with their stakeholders are no more likely to have achieved high levels of alignment than those that take a more ad hoc approach to monitoring and responding to external concerns. Stakeholder engagement is an established touchstone of CSR best practice - but could it really be that it is a waste of everybody's time?" The overarching finding was that positive stakeholder relations are important to business performance and that these cannot be achieved by processes like structured stakeholder dialogues but perhaps by aligning core business with the interests of the most stakeholders. If companies are naturally aware of societal challenges then stakeholders will not complain, and costly add-on initiatives to engage them beyond the normal course of business will not be required. In a free society, stakeholder silence is golden. The findings were not entirely new, but the fact that an EU backed project involving esteemed management institutions and a large data set now back them up will be useful to champions of real change in corporations to create business models that benefit a broader set of stakeholders.
The report and conference discussed implications of these findings. One insight was that less resources should be paid to formal stakeholder dialogues and more attention to creating organisational cultures and systems that reconnect staff with their communities and personal values, so that they can organically innovate new business models that are inherently more aligned with societal needs. One limitation in both the report and conference appeared during the discussion of how non-business stakeholders could change in light of the research.
The study is limited in its understanding of the stakeholder universe and this impairs its conclusions. A key limitation is in understanding the strategies of non-governmental organisations. For instance, the report recommends that as "companies with high alignment are more often found in countries, industries and competitive niches characterised by rapid change than by those where business models and social norms are more stable," so NGOs should focus their engagement on these companies. That might make sense for market researchers but NGOs often choose to focus on the companies that are most resistant to change, and seek to create contexts that will shift them, deciding who to focus on for broader concerns about what will drive social change. The WWF work on the luxury sector discussed earlier is a case in point. Another example of a mistaken assumption about NGOs is that they will decide to invest their resources in better engaging in internal change dynamics of companies. The report says NGOs "need to substantially upgrade their understanding of corporate processes and their skills in coordinating and cooperating to drive and support internal change." However, NGOs will need to assess whether CSR will deliver a sufficient scale and pace of social change compared to other activities they could be involved in, such as lobbying for regulation, before deciding to investing in such skill development. Some would argue that if business wants these changes then they can pay consultants. NGOs management would also assess whether investing in such skills relates to their own business model in terms of maintaining a distinctive role in society that will attract sufficient media attention to generate public and donor support. Calling on pensioners to donate 10 dollars a week to finance you being skilled at understanding accounting or marketing is not an easy sell.
A second key limitation of the Response study's understanding of stakeholders is that it does not account for differing states of civil society across Europe. In Eastern Europe the history of civil society is very different from the West and so not finding dissonance in expectations of stakeholders and companies there is a function of a relative lack of a tradition of independent informed critical civil society and media.
These mistakes are inevitable given that stakeholders were treated as sources of data , not objects of study, nor played any role in guiding the objectives of the inquiry. It is ironic that a research project about stakeholder engagement had no real stakeholder engagement in its design, governance or assessment. It is also ironic that one of the conclusions of the report is the importance of managers developing social consciousness (through various relaxation techniques), and thus an ability to appreciate interconnections and different points of view. What is the social consciousness of EABIS and the research partners? Asking for data from stakeholders and then chatting together about it in the safety of an elite management institution, pontificating on what the implications might be for stakeholders. That would appear to manifest a hierarchical and protective mindset, rather than an open and boundary crossing consciousness, which would involve recognising the equal dignity and autonomy of others, not just their relevance to you and your employers.
On the cover of the Response report was a picture of an iceberg. Stakeholders are the iceberg under the water in this study and have been frozen out of EABIS and many top business schools. To bring them in from the cold will require not only humility but a preparedness for discomfort in grappling with insights from interdisciplinary areas like development studies and civil society studies, which more effectively integrate sociology and political science with the traditional theoretical bases of management studies. EABIS could make a start by commissioning a stakeholder assessment of the implications and limitations of the study, with sociology, political science and development studies specialists in support, and then base a research project on the findings of this assessment. They might also assess what stakeholders could get from EABIS and what they could bring, and consider changes to organisation membership and governance as a result.
The Response project has been important in suggesting CSR should not be a practice, a profession, a department, but that companies can evolve so all staff in all departments consider both financial and societal value. We need top-to-bottom sustainable enterprises. Oops, it's that term again.