Reputations at stake

CSR in a bargaining society

In Reputations at Stake, Rob van Tulder and Alex van der Zwart examine the ethical and practical difficulties encountered by businesses, governments, and societal organizations when aiming to adopt ethical business practices. They propose that relying solely on legislation is inadequate and that the influence of reputation is somewhat limited. Although I could only locate a Dutch version of this book, I feel compelled to share these crucial ideas.

The driving force behind Corporate Social Responsibility (CSR)

The driving force behind CSR (Corporate Social Responsibility) is the ‘reputation mechanism’. It is best not to create any legal obligations for this, as this can give rise to undesirable evasive behavior.

The reputation mechanism has a self-regulating and disciplining effect from society. But what is “net behavior”? Regarding what needs to be corrected, if necessary? Who can ‘solve’ the wrong behavior with whom?

Tensions between social groups

What are the areas of tension between social groups? What challenges does that bring?

There are three areas of tension that recur throughout the book:

• Public vs private
• Profit vs non-profit
• Efficiency vs Ethics

Can companies act in a more socially responsible way based on a model of discipline and correction? And how can this model be used in practice?

Part I – The most important social movements of the 1990s

Part I is about an analysis of the most important social movements of the 1990s. The building blocks (spheres) are: the market, the state and the bourgeoisie. This is about coordination mechanisms in a society and how they interact. The responsibilities and spheres of influence of the building blocks differ, and that offers advantages. There are changes between and within the building blocks. There are problems with clashing building blocks, in terms of legitimacy, control and effectiveness. This section maps out the challenges of CSR with regard to social interface management.

Part II – CSR, Principles of Interface Management and Reputation.

The only responsibility of a company is to pay, at least according to monetarism. All the rest leads to non-rational action, and therefore to loss of prosperity. However, this does not apply to hybrid organizations. Social and institutional capital appear to be very important. Soft factors such as trust, reputation and entrepreneurial spirit are becoming increasingly important for achieving intended profits/goals. Expectations between the spheres are therefore important and must be adjusted regularly. Three components are important for CSR to move in the right direction:

• Issues of CSR and how to deal with them effectively?
• What are the practical difficulties faced by companies in disciplining CSR?
• The reputation mechanism: can reputation be an effective corrective if companies are not socially responsible?

Part III is about cases, cases and cases that give different experiences.

Part IV – Solutions

It starts with lessons in reputation, correction and discipline. Governments argue that the reputation mechanism can be used to determine the boundaries of social responsibility. The mechanism has a corrective effect on indictments. The 17 cases of the book provide a number of experiences and patterns. This chapter seeks explanations.

The arsenal and tactics of NGOs

The arsenal of weapons and tactics that NGOs (must) use to activate the reputation mechanism are:

• Simplifying and exaggerating the situation: this works on emotion and perception. This also includes ‘attachment journalism’: journalists become an appendage of, for example, an NGO.
• Unambiguous interest and coalitions with primary stakeholders. Single-issue NGOs are the most successful.
• Timing and targeting: NGOs are successful when they take the right action at the right time.
• Iconification: NGOs are strategic organizations and should therefore tackle a major player. When one turns, many others often join in.
• Digital pillory. The use of the internet and social media in the moral crusade. This is for international solidarity, demonstrations, boycott calls, …
• No code of conduct: this is often a stumbling block for NGOs.

Better at correcting than disciplining

The reputation mechanism appears to work better to correct than to discipline. These ways of exerting influence are called ‘civil regulation’. But the reputation mechanism is blunt and sometimes unfairly disciplining.

Reputation works better with other measures. Conflict, confrontation and control are less effective than cooperation, dialogue and co-production. The final chapter deals with the preconditions and contours of an effective strategic stakeholder dialogue as the ultimate form and challenge of social interface management.

Finally, we are moving towards a strategic stakeholder dialogue.

According to Chapter 24, the effectiveness of the reputation mechanism is sometimes sobering. The question remains how companies and NGOs can achieve a new and effective form of CSR through cooperation and dialogue. Is it naïve to preach about dialogue when there are many conflicts of interest?

Communicate openly, credibly and honestly

Open, credible and honest communication adjusts perceptions. It creates credibility to admit mistakes and vulnerabilities in contact with society. Participation in knowledge of the dilemmas creates trust among the stakeholders. It pays to proactively apply forms of discipline for the benefit of potential CSR issues. A good dialogue ensures that the environment and the company understand each other’s issues better. Dialogue is also a catalyst for change. Reporting can structure the dialogue. Stakeholder dialogue also lends input for the development of KPIs. These translate ambitions and responsibilities into measurable objectives for management, employees and external stakeholders. However, there is no single set of standards and indicators. Unfortunately, complicated social issues do not lend themselves well to strict and binding indicators and rules of the game.

Being deaf and blind to signals from society, expressed in empty promises, arrogance and inward-looking behavior, are the main reasons for NGOs to target companies.

Choices and compromises

But not everything needs to be discussed. Choices are made and compromises are necessary and inevitable. Stakeholders don’t have to be involved in everything. The success of a stakeholder dialogue depends on several factors. Ten prerequisites for success are:

• To know and to be known: also the question of who bears what consequences of the dialogue.
• Trust and trustworthiness: both must be open and vulnerable.
• Clear rules of the game: agreements are necessary, despite great trust.
• A coherent vision on stakeholder engagement: what is the underlying philosophy? Which stakeholders? Preferably not just anyone.
• Successive conversations: at least feedback on the agreements.
• Dialogue skills: it’s not a debate.
• Content expertise: knowing what both you and the other person are talking about.
• Clear dialogue structure: clear expectations about the possibilities and limitations of the dialogue.
• Valid information as a basis: don’t just bend it to your own will or tell incomplete facts. Prior validation of the facts may be necessary.
• Feedback of the information: don’t freewheel away from the supporters, otherwise you can be rebuffed.

Title: Reputaties op het spel – Maatschappelijk verantwoord ondernemen in een onderhandelingssamenleving, Authors: Rob van Tulder; Alex van der Zwart, Publisher: Het Spectrum, ISBN: 9789027480621