Strategic Corporate Social Responsibility as

Stakeholder Management:
The Business Case for Corporate Social Responsibility (CSR) in
Korean Electronics Industry

Ki-Hoon LEE
The Graduate School of Corporate Environmental Management
The University of KwangWoon
447-1, Wolgye-dong, Nowon-gu, Seoul, 139-701, KOREA
E-mail: khlee@kw.ac.kr

ABSTRACT
The catchphrase corporate social responsibility (CSR) may be associated with
unnecessary ambiguity for some companies. In particular, global-scale companies
including Samsung Electronics and LG Electronics continue to expend various
resources for related activities without a coherent notion of the concept of CSR. What,
though, does corporate social responsibility mean to companies? Without a clear
understanding of the meaning of CSR, how companies can respond or take action in this
area? For the purposes of this study, CSR indicates corporate stakeholder responsibility.
Having the relevant key stakeholders involved in corporate business activities,
companies can likely understand how to respond to and contend with these stakeholders
in a strategic way without becoming weaker in terms of competitiveness. This study
attempts to answer how and why companies respond differently to their stakeholders. It
found that when key stakeholders were identified by decision makers, it resulted in
different strategic choices or responses. This may imply that unidentified stakeholders
have no influence or impact on corporate business activities.
Keyword List: corporate social responsibility, corporate social responsiveness,
corporate stakeholder responsibility, competitiveness, Korean electronics industry,
sustainable value

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INTRODUCTION
Many global companies have suffered the adverse consequences of not acting
responsibly. For example, Nikes share price and brand sales were damaged severely
when the news broke regarding the poor production conditions of its factories in Asia.
In addition, Enrons unethical practices led to the companys dissolution and criminal
indictment of former executives. Since Bowen (1953)s Social Responsibilities of the
Businessman published, there have been growing discussions with respect to corporate
social responsibility (McGuire, 1963; Greenwood, 1964; Klein, 2000; Brooks, 2005).
What should companies be responsible for? Despite the fact that there has been great
debate spanning decades about this central question, there remains a lack of consensus
regarding the definition of corporate social responsibility and thus no framework or
model for a systematic accounting (Carroll, 1979; Clarkson, 1995). McGuire (1963)
has, for example, suggested that corporate social responsibility supposes that there are
economic and legal obligations as well as certain responsibilities to society in
corporations activities. In more simplistic terms, Hay et al. (1976) suggest that business
is viewed as having a responsibility in terms of corporate business and other social
problem areas. There are many categorisations of corporate responsibility. One of the
most common is the triad of economic, environmental and social responsibilities, as in
the popular slogan triple bottom line (Elkington, 1998). In academic and practical
literature, a distinction between social and environmental responsibilities is not
generally observed. Some academics include social issues under the label sustainability
and others include environmental issues under CSR.

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Carroll (1979) attempted to explain corporate social responsibility by building a

conceptual model of discretionary, ethical, legal and economic responsibility
dimensions. She considered corporations with respect to their response to social issues
mainly by the strategy behind their responses. As Carroll (1979) pointed out, corporate
social responses are managements social performance rather than social responsibility.
Therefore, corporate management would choose their strategic options with respect to
social responsibility.

More recently, Wartick and Cochran (1985) viewed corporate social responsiveness as a
process of corporate social performance. Using Wilsons (1974) reactive-proactive scale
model, Wartick and Cochran (1985) argue that corporate responses are directed at
managerial approaches to developing responses. However, as Wood (1991) observed,
the concept of the theoretical framework and impact of corporate social responsibility
has not moved significantly beyond Wartick and Cochrans (1985) articulation.
According to Clarkson (1995), the principal reasons for this failure result from the
vague meaning of the term social and the lack of clarity on an appropriate level of
analysis.

The research is, in particular, motivated by Clarkson (1995)s point as mentioned above.
First of all, this study considers the term corporate social responsibility and/or corporate
social responsiveness as corporate stakeholder responsibility1 (emphasis added).

The term corporate stakeholder responsibility is conceptually proposed here. CSR stands for corporate

social responsibility in this paper in order to avoid any unnecessary misunderstanding or confusion
resulting from a newly formed term of corporate stakeholder responsibility.

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The main reason is that the both concepts of corporate social responsibility and
corporate social responsiveness have explicitly included business itself as well as
corporate stakeholders. Therefore, it would be more a fruitful approach to build and
analyse business cases rather than to argue the finer points of the concepts and
definitions of CSR semantic debate that has continued over five decades (Wood,
1991). Another important reason to conduct this research is because researchers ignore
many differences within stakeholder groups when they examine and measure corporate
social responsibility and performance (Harrison and Freeman, 1999). While numerous
conceptual, theoretical and empirical literature examples have been published since
Bowens (1953) book appeared, this review may be limited. Thus, in discussing
stakeholder management, only the most important ideas and conclusions that are
relevant to advancing the aims of this paper will be drawn.

This paper presents the results of research that investigated CSR strategies and practices
carried out in a sample of companies.

Being Responsible: What Does It Actually Mean?

Never before has there been such pressure on companies to address their social and
environmental responsibilities, and never before has there been such a wealth of
opportunity to be derived from doing so. Companies that embrace corporate
responsibility recognise that their social and environmental impact has to be managed in
just the same way as their economic or commercial performance. Getting started, or
putting corporate responsibility principles into practice, can be difficult, however, and
many companies struggle to justify the management of social and environmental affairs

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in terms of business benefits. In principle, the term corporate social responsibility

(CSR) refers to the obligations of companies to society; more specifically, it refers to a
companys stakeholders and those affected by corporate policies and practices.
Although there is a CSR dichotomy between the right thing to do (a normative case)
and an enlightened self-interest (the business case), executives and companies
reasoning as they relate to engaging in CSR likely reflect a mixture of these (Smith,
2003). Although many companies can agree that the CSR principle is concerned with
the societal obligations of business, they are not certain about the nature and scope of
these obligations. The operational meaning of CSR continues to be vague (Sethi, 1975;
Smith, 2003).

Having additional business cases for CSR may provide a quantity of real answers
concerning why and how companies embrace CSR into their strategies and business
activities. In strategic management, Freeman (1984) introduced a stakeholder concept in
his book Strategic Management: A Stakeholder Approach. As seen in the title of the
book, corporations and decision makers need to identify and understand the
stakeholders, and manage them strategically. Recently, a number of prominent
companies have focused on building strong stakeholder relationships as a key element
of their business strategy. For example, Toyota and Honda adopted a policy of engaging
with their suppliers in their social and environmental management scheme. In addition,
Samsung and LG Electronics have placed emphasis on their socio-economic
contributions and their corporate reputations. The assumption underpinning these
strategies is that establishing positive relationships with stakeholders is ethical; plus it
makes good business sense. Consequently, it has a positive effect on corporate

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competitiveness and has a sustainable value. Hart and Milstein (2003) note that the
sustainable value framework makes clear the nature and magnitude of the opportunities
associated with sustainable development and connects them to dimensions of increasing
corporate value and competitiveness for the firm.

From the work of Post et al. (2002), the term stakeholder management refers to the
development and implementation of organizational policies and practices that take into
account the goals and concerns of all relevant stakeholders, all of whom are entitled to
consideration in managerial decision making. Strategic stakeholder literature
emphasizes the active management of stakeholder interests and has utilized various
approaches including corporate social responsibility studies (e.g., Donaldson and
Preston, 1995), network theory (e.g., Rowley, 1997) and resource-based thinking (e.g.,
Frooman, 1999). With the assumption that there are numerous stakeholders and that
their interests are differ, it is held throughout this paper that strategic stakeholder
management is about managing potential conflicts stemming from divergent interests
without losing corporate competitiveness.

Corporate Competitiveness and CSR

It is insufficient to say that social responsibility detracts from a firms primary
obligation-maximizing profits. This perspective ignores social and economic progress.
Increasingly, profit maximizing strategies need to be tempered by CSR considerations.
Stakeholders ironically hold both the key to success while also posing the biggest threat
to embedding corporate responsibility (Frooman, 1999; Henriques and Sharma, 2005).
The global economy and global information flow is demanding closer ties with all

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stakeholders, employees, suppliers, customers, communities and shareholders.

Stakeholders are looking at the social and environmental performance of all parties in a
products life cycle, from extraction to end-of-life (Paine, 2003). An association with
non-responsible companies through the supply chain can pose a real threat to
organizations (Wood and Brewster, 2005).

As Porter and Kramer (2002) noted, corporate executives often find themselves in a nowin situation, captured between critics demanding even higher levels of corporate social
responsibility and investors applying relentless pressure to maximize short-term profits.
Given the current haziness surrounding corporate responsibility, it seems an appropriate
time to revisit the fundamental question: Should corporations engage in social
responsibility at all? Friedman argued in a 1970 New York Times Magazine article that
the only social responsibility of business is to increase its profits. In his book
Capitalism and Freedom, he also claimed that there is one and only one social
responsibility of business - to use its resources and engage in activities designed to
increase its profits so long as it stays within the rules of the game, which is to say,
engages in open and free competition, without deception or fraud (Friedman, 1962,
pp.60-61). The underlying assumption of Friedmans argument is that social and
economic objectives are separate and distinct, so that a corporations social expenditures
come at the expense of its economic results. However, it is increasingly and widely
accepted that attempting to isolate business from society is unrealistic and that
dichotomizing economic and social objectives as distinct and competing are false
(Porter and Kramer, 2002; Smith, 2003). In particular, strategic management supports
that the strategic decisions of large organizations inevitably involve social as well as

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economic consequences, inextricably intertwinedthere is no such thing as a purely

economic strategic decision. (Mintzberg, 1983, p.12).

Identifying Stakeholders and Stakeholder Groups

The newly proposed term corporate stakeholder responsibility in this paper highlights
stakeholder identification (i.e., who are a companys relevant stakeholders?).
Stakeholders have been defined in various ways, with a broad definition being given by
Freeman (1984) as a stakeholder in an organization is (by definition) any group or
individual who can affect or is affected by the achievement of the organizations
objectives (p.46). Preston (1990) found that General Electric, during the depression
years in the United States, identified four major stakeholder groups as shareholders,
employees, customers, and the general public. Additionally, Johnson & Johnson in 1947
listed strictly business stakeholders as customers, employees, managers and
shareholders. Preston cited Sears president Woods view on profit as a by-product of
success in satisfying responsibly the legitimate needs and expectations of the
corporations primary stakeholder groups. According to Clarkson (1995), stakeholders
are persons or groups that have, or claim, ownership, rights, or interests in a corporation
and its activities - past, present, or future.

Based upon the urgency and necessity for corporate survival, Clarkson (1995) divided
stakeholders as primary and secondary stakeholders. Power is the ability to influence a
firms behaviour, whether or not a stakeholder has a legitimate claim. Urgency is the
degree to which a stakeholders claim calls for immediate attention, adding a dynamic
component for a stakeholder to attain salience in the minds of managers. A primary

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stakeholder group is one without whose continuing participation the corporation cannot
survive as a going concern. This group is typically comprised of shareholders as well as
investors, employees, customers, and suppliers. If any primary stakeholder group
becomes dissatisfied and withdraws from the corporate system, in whole or in part, the
corporation will be seriously damaged or unable to continue as a going concern
(Clarkson, 1995). A secondary stakeholder group is one that influences or affects, or is
influenced or affected by the corporation, but are not engaged in transactions with the
corporation and are not essential for its survival. The media and a wide range of special
interest groups are considered as secondary stakeholders under this definition.

As corporate organizations have limited resources, strategic responses to stakeholders

based upon power and urgency may provide sorting criteria for identifying and
prioritizing stakeholders. Managing stakeholders strategically is seen as a means of
increasing the likelihood of achieving the ends of the corporation, or, of greater
financial performance (Mellahi and Wood, 2003). Berman et al. (1999) empirically
examined a strategic stakeholder management model in which firms will address
stakeholder concerns when they believe doing so will enhance their financial
performance. Their study found that when corporations foster connections with key
stakeholders and ensure that they are allocated resources, it contributes to their
profitability.

Stakeholder Engagement: Strategic Choice

Most companies understand the importance of managing relations with key stakeholders
such as shareholders, customers, employees, the local community, government, the

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media and the general public. Arguably, companies that have been successful in this
area have done more than simply issuing regular press releases and responding to
enquires. Given that companies have limited financial, human, physical and natural
resources, it isnt seen as efficient or effective to deal with all stakeholders equally. The
question that regards how individual firms formulate their CSR strategy should reflect
an understanding of whether and why greater attention to CSR is warranted by a
particular organization. This question is raised to consider the complexity of a
stakeholder engagement strategy. The WBCSD warns that a one-size-fits-all approach
to CSR strategy (e.g., universal codes of conducts) may not provide the right answer.
Equally, however, generally asserted reasons for greater attention to CSR also may not
have universal application (Smith, 2003).

According to Carroll (1979), corporate social responses represent managements social

performance rather than social responsibility. She viewed corporate response to social
issues as strategic choice; that is, management can choose their strategic options with
respect to social responsibility. Carroll (1979) and Wartick and Cochran (1985)
expressed a managerial approach to characterise corporate strategy toward social
responsiveness using a reactive defensive accommodative - proactive scale. Their
categorization of corporate strategy is based upon a performance level of doing less
(reactive) and doing more (proactive). The strategic decisions about certain levels of
corporate responses are based upon whether business decision makers see stakeholders
as threats and/or opportunities while conducting their businesses activities. From a
strategic choice perspective, Savage et al. (1991) proposed a stakeholder management
strategy with its basis concerned with potential threats or opportunities to firms.

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Similarly, Harrison and St. John (1996) developed a priority status stakeholder
management based upon the level of strategic importance.

Another important factor is related to the influence of corporate leaders within the
organization. It is their behaviour that serves as a model and message-sender to all.
Therefore, top management commitment to strategic CSR is key, and commitment is
signalled by chief executives. It would be a useful approach to identify the linkage
between top managements commitment and strategic responses. Although assessing
the effectiveness of CSR efforts is often qualitative and hence difficult to measure and
quantify, this study attempts to provide business cases for CSR while exploring top
managers understanding of CSR and strategic responses.

RESEARCH METHODOLOGY
An exploratory, qualitative approach is used in order to develop understanding, gain
new insights, and clarify meanings. Qualitative methods typically produce a wealth of
detailed information about a much smaller number of people and cases (Marshall and
Rossman, 1995).

A multi case study is adopted for this study. As the field of business and society is
young and no widely accepted integrating framework exists (Jones, 1995), it is valuable
for research to explore real organizational goals and processes in organizations, and to
understand the failure of policies and practices. In total, 15 companies were researched
in order to provide a reasonable level of breadth without sacrificing the depth and
richness of the data (Eisenhardt, 1989).

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In the 15 case studies, qualitative data was mainly obtained and analysed. In this study,
qualitative data was obtained through the open-ended, in-depth, face-to-face interviews.
The collected qualitative data was analysed in a systematic way to produce presentable
output. This method was selected as it has advantages over other methods for achieving
the research objectives. In addition, a document analysis uses data from both primary
and secondary literature sources, such as social and environmental policies and reports,
data obtained from NGOs and research organizations, internet sources, promotional
material, journals, and other publications.

One of the most important information sources in this study is the interview. As Punch
(1998) points out, the interview is considered a very good way of accessing peoples
perceptions, meanings, definitions of the situation and construction of reality. It is also
one of the most powerful ways we have of understanding others (p.175).

Interviews were conducted in 15 companies with a total of 40 corporate top managers in

the Korean electronics industry from April through June of 2005. A compiling of the
respondents by job title appears in Table 1.

[Table 1 about here]

A partially structured, focused interview technique was employed throughout. An

interview guide provided a framework of topics to be covered, but the manner and

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sequence in which they were asked varied from interview to interview. The interviews
averaged approximately one and a half hours.

Fifteen case studies were made. Each company case is related to a single case study. The
main topics described in each case study are: top-level commitment to strategic
management, and different business activities related to CSR issues.

For top-level commitment, the following issues are included:

Top-level responsibility

CSR policy

Strategic planning

Stakeholder involvement

For business response to CSR issues, the following issues are included:

Social and environmental performance

Social and environmental reports, and sustainability reports

Social and environmental standards (AA 1000, SA8000, ISO14000)

Record of fines and penalties

Eco-products

The results obtained from this analysis were assessed by comparing them to the results
obtained from a conceptually clustered matrix analysis (Miles and Huberman, 1994).
According to Miles and Huberman (1994), a conceptually clustered matrix was
developed by bringing together items that belong together (p.127). This method uses

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descriptive displays of the data to identify common themes.

The author found it possible to identify the following themes: top management
commitment, and the strategic importance of CSR issues and operational performance
on CSR issues. Top management commitment includes top level responsibility and CSR
policy. The strategic importance of CSR issues includes strategic planning and
stakeholder involvement. Operational performance on CSR issues includes social and
environmental performance, social and environmental (sustainability) reports, social and
environmental standards, record of fines and penalties, and eco-products.

ANYLYSIS
Patterns of CSR Strategy
Adapting CSR into business strategy and activity is considered a complex and multidimensional process. Identifying the key elements in a study of this is straightforward,
but by analyzing case studies, three themes were identified. As mentioned earlier, the
cluster analysis method was used to identify groups of strategic behaviours. The results
for the cluster analysis of fifteen companies across the three aforementioned dimensions
of CSR are shown in Figure 1.

Hierarchical clustering procedures were employed to determine similarities and

differences among the fifteen cases in terms of their scores on the dimensions of CSR
themes. The objective of the cluster analysis was to discover which cases hung
together in terms of the dispersion of their scores on all of the dimensions considered
jointly (Miles and Huberman, 1994).

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A clustering technique that maximises the differences between clusters and avoids the
changing effects that occur with techniques such as the nearest neighbour was
considered to be the best approach. Using SPSS (ver. 11.0), Wards clustering method
helps to identify similar groups and offers opportunities to investigate similarities and
differences among different cases and groups (Barney and Hoskisson, 1990). Below are
the results of Wards method clustering (Figure 1).

[Figure 1 about here]

Four groups of companies are identified from the dendrogram:

Group A: Company 3
Group B: Company 9, 12, 13
Group C: Company 4, 14, 15
Group D: Company 1, 2, 5, 6, 7, 8, 10, 11

This gives an indication of which dimensions are discriminating the cluster from the
other clusters.

Identifying the key elements in the study was challenging, however, after analysing the
case studies, three themes were identified. As mentioned above, a cluster analysis
method is used for identifying groups of strategic behaviours. The results of the cluster
analysis of the sampled 15 companies across the three dimensions of strategic CSR
behavior are shown in Table 2.

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[Table 2 about here]

The results of the cluster analysis identify four patterns of CSR strategic behaviour.
Similarities and differences between the clusters are particularly so that general patterns
of CSR strategic behaviour can be identified and a more coherent descriptive profile of
the clusters can be developed.

Group A
Company 3 has very low level of strategic importance and operational performance of
CSR issues. Only the dimension related to top managements commitment of CSR
issues has a medium rating. Such a low rating would indicate that the company is facing
some difficult challenges both within the organisation and from the outside. As
environmental performance was poor in 2003 and 2004, the company had to pay a
number of fines for exceeding their effluent consent levels. There were also
demonstrations by local residents protesting against the air pollution and noise which
resulted from the manufacturing process. In addition, environmental groups found
suspicious pipelines from the company facilities at the entry of a local riverside.
Environmental groups reported their findings to a local court, and investigators were
sent to examine the issues.

Although the company had to make substantial investments in order to comply with
environmental legislation, there was a definite focus on only regulation compliance. The
management is trying to implement some changes; however, the strategic consideration

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and operational performance is very low, while there is little more from management
other than its expectation of compliance. One of the top decision makers, the vice
president, confirmed that this company has not discovered opportunities from
stakeholders excepting the severe threats from them, including increased regulation and
legal allegations. He stated, You know we tried our best, but we still have the same
number of non-compliance issues, and the severity is just as bad.

The characteristics of Group A can be summarised as follows:

A reactive approach to CSR with a lack of top management commitment and
strategic considerations

Lack of staff who hold responsibility for legal compliance

Weak commitment in terms of international standards for new and existing
operations

An absence of linkage between financial performance and social and
environmental performance.

Group B
The companies in Group B show high levels of strategic importance and operational
performance of CSR issues with a medium level of top management commitment. All
three companies have no major social and environmental problems, although their
businesses do not involve products or processes that carry high social and
environmental risks. The major feature that these three companies have in common is
that they are all voluntarily implementing changes in their companies that reduce their
companys impact on the natural environment and local community.

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This group of companies maintains a good social and environmental performance

record by reducing emissions from their facilities through investments in advanced
process technology, as well as by strategically focusing their product range. These
companies have discovered that the investment in new technology can both reduce
environmentally hazardous emissions as well as reduce cost through increasingly
efficient production. More meaningfully, there have seen a significant positive
relationship

between

environmental

performance

and

financial

performance.

Essentially, their environmental investment has increased while their turnover has also
increased. At the same time, their environmental performance has improved. Overall,
for these companies, environmental effectiveness and cost efficiency correlate well
together.

With regard to increasing cost pressures, one CEO from this group states:

Historically, companies like us have been accused of putting the financial

bottom line before their wider social or environmental responsibilities and of
concentrating on shareholder interests to the detriment of other stakeholder
groups such as employees and customers.

From this viewpoint, linkages between technological improvements, cost containment,

and environmental effectiveness will only grow in importance.

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The drivers for being environmentally conscious were primarily external in nature
arising from governmental regulations and market opportunities to tap the growing
demand for environmentally compatible products.

Characteristics of this group are:

A desirability to make an early financial investment in environmental protection
and technology development

Top management commitment to social and environmental issues seen as
critical for success

Effective decentralisation of social and environmental specialists in different
business units

Social and environmental considerations are viewed as an inseparable part of
business performance. It is seen as useful to set quantitative targets for different
social and environmental performance measures.

Group C
The companies in this group show high levels in the three different areas of top
management commitment, strategic importance and operational performance of CSR
issues. These companies have had very sound social and environmental performance
records over the last five years. This group of companies has achieved superior social
and environmental performance compared with companies in Groups A and B. They
take their reputation and corporate image very seriously. The CEO at Company 4 stated:

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A weak or poor reputation can threaten goodwill, co-operation and ultimately

the companys license to operate. Such a threat now faces our company. Its
reputation is mixed, with some areas of important strength. But it also has
negative associations which, if left unchecked, are likely to undermine the
companys ability to operate smoothly and efficiently - in other words, its
ability to serve its stakeholders and, in particular, its shareholders.

All of these companies are aware of CSR issues and regard these issues as business
opportunities rather than threats. Thus, with top managements support, these companies
have a proactive strategy in social and environmental investment and technology
development. As the CEO at company 14 reported:

There is growing awareness that addressing sustainability concerns does not

depend on a tremendous investment but more on a proactive approach,
managerial ability and commitment tied to smart investment.

The initial cost of incorporating CSR concerns is seen as an investment rather than an
expense. It is an investment that has significant impact on the overall business. Those
companies with the skills to manage these issues do so at a fraction of the cost, and far
more effectively than those without an integrated approach. The companies manage to
maintain a certain level of social and environmental investment each year while
showing very good social and environmental performances.

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There are a number of important drivers leading to an emphasis on social and

environmental issues. These are governmental regulations, increasing public awareness
of social and environmental issues, corporate image and reputation, demands from
customers and the media. The effect has been for both social and environmental
performance and financial performance to show a positive increase.

The following are the characteristics of Group C companies:

A proactive approach to CSR issues and stakeholder management, as seen from
the setting of specific targets for future social and environmental performance
for outcomes, inputs and processes, is critical for success.

Top management understanding of CSR issues and support for these brings
much more attention to operational performance.

Communicating their commitment to social and environmental standards and
performance to their employees, shareholders, suppliers, customers and the
local communities

Recognising and responding to the communitys questions about their
operations

Actively participating with government agencies and other appropriate groups
to ensure that the development and implementation of social and environmental
policies, laws, regulations, standards and practices serve the public interest

Group D
The group of companies in this category shows medium level of top managements
commitment, strategic importance and operational performance of CSR issues. All eight

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companies have been focusing on reducing their operating costs and have not focused
on social and environmental issues more than what is required by regulations. Most
investments made were primarily to reduce cost, with environmental improvement as a
secondary consideration. A more detailed case study data shows no clear sign of a
significant reduction in pollution levels or waste.

For example, Company 8 is primarily focused on complying with regulations regarding

their operations but are taking a much more aggressive approach regarding their
products. The company stays very well informed about the types of electronics included
in their products and is attempting to reformulate any product that contains hazardous
chemicals that require special permits for use or are banned in certain markets. For
example, when chlorofluorocarbons (CFCs) were banned, the company had to secure a
replacement for the refrigerant in their refrigerators. This strategy helps the company to
keep compliance costs down, as the company avoids using certain hazardous materials,
thus avoiding the costs of obtaining permits and disposing of hazardous wastes. The
company has not faced any major environmental problems related to their business
activities.
CEO at Company 10 confirmed this. According to him:

All other companies like us are restructuring their organisations. If we dont

make it, I dont think we are able to be competitive in the market. In this
situation, paying attention to CSR issues does matter for business survival.

Group D companies have been identified as lacking the following characteristics:

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Providing ongoing education and training for employees to effectively deal with
day-to-day social and environmental responsibilities.

Complying with and exceeding requirements of all applicable social and
environment-related laws and regulations.

Communicating their commitment to social and environmental standard and
performance to their employees, shareholders, suppliers, customers and the
local communities

Recognising and respond to the communitys questions about its operations.

Regularly assessing and reporting to management and the board of directors the
status of its compliance with this policy and with social and environmental laws
and regulations.

Based on the analysis of four different clusters, a CSR strategic response pattern was
compiled, and is shown in Table 3.

[Table 3 about here]

The cluster analysis identified four different groups of companies. These are labeled
laggard, limbo, champion and fire-fighter. Laggard indicates the minimum level of CSR
while champion refers to the maximum level of CSR in given cases. Only one company
is labeled as laggard, with a marginal monitoring strategy, while the majority of the
companies are positioned as fire-fighters, with a non-supportive and defensive strategy.
Some companies are situated in limbo with mixed or collaborative strategies, or denoted
as champions with a supportive and involved strategy.

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CONCLUSION
This paper began with a criticism of the vagueness of the term corporate social
responsibility (CSR) which has been debated over several decades. In order to
understand corporate social responsibility at the firm level, top managements
identification and prioritisation of stakeholders, and its commitment to and impact on
corporate responses and strategies were studied. Based upon the findings of this study,
the following conclusions can be drawn.

First, few companies are positioned as a laggard type in terms of CSR management.
The common characteristic of this category is that top executives view CSR issues as a
serious regulatory burden or threat. Thus, a company in this category tries to meet the
minimum level of regulatory legislation.

Second, the majority of Korean electronic companies are situated in fire-fighter category.
As a characteristic of this category is in the companys complying with legislation while
avoiding extra cost, many companies continue to adhere to regulations rather than
identify new business or market opportunities. In this case, top executives do not see
CSR issues as new opportunities.

Third, some leading companies are positioned as in limbo or as champions. The main
characteristic of these companies is related to seeking new business opportunities
through CSR management. In other words, to them achieving leadership and a
competitive edge in CSR management will lead to better social, environmental and

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financial performance. In addition, a continuous commitment and improvements in

these areas are other main characteristics of these two groups. The main difference
between the two groups is dependent on explicit social and environmental goals as a
main business goal. The limbo group has fairly business-oriented goals while the
champion group has more balanced social, environmental and financial goals.

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Berman, S., Wicks, A., Kotha, S. And Jones, T. (1999) Does stakeholder orientation
matter? The relationship between stakeholder management models and firm financial
performance, Academy of Management Journal, Vol.42, pp.488-506.
Bowen, H.R. (1953) Social responsibilities of the businessman, New York: Harper &
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Figure 1. Output of CSR Cluster Analysis

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Table 1. Composition of Respondents by Position Title

Position

Number

Corporate Executive Officers

Corporate Vice Presidents
Directors of CSR/Compliance Officers
Directors of EHS Affairs
Directors of Public Relations

6
9
8
13
4

TOTAL

40

Table 2. Generalised Patterns of Strategic CSR Behaviour

Dimensions of Strategic CSR Behaviour
CSR Themes
Top
Managements
Commitment

Strategic
Importance of
CSR

Operational
Performance of
CSR

VL

VL

9, 12, 13

4, 14, 15

1, 2, 5, 6, 7, 8, 10, 11

Cluster

Company

H = High, M = Moderate, L = Low, VL = Very Low

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Table 3. The Strategic Patterns of CSR Response

Cluster

Label

Laggard

Identified

Prioritised

Stakeholders

Stakeholders

Government
Shareholders

Limbo

Customers

Government
Shareholders
Customers

Employees
Government

Strategic Response
Monitoring Strategy
Collaborative
Strategy

Government

Shareholders

Champion

Employees

Shareholders

Customers

Employees

Involvement and

Competitors

Competitors

Maintenance

Investors

Customers

Suppliers

Investors

Strategy

The Public
D

Fire-fighter

Government

Government

Shareholders

Shareholders

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Defensive Strategy

Brief Bio Information

Professor Dr. Ki-Hoon Lee leads corporate sustainability management research group
and holds the chair of corporate sustainability management (CSM) at the KwangWoon
University. He is director of the Green MBA programme. He introduced the corporate
sustainability management (CSM) framework and guidelines to the Korean industries as
an advisor on the Korea Business Council for Sustainable Development (KBCSD). His
research interests include corporate sustainability management, corporate social
responsibility,

stakeholder

management,

sustainability

reporting,

corporate

sustainability and value creation. He is the author of 2 books as well as of numerous

papers on business, strategic management, stakeholder management and sustainable
development. His recent book includes corporate sustainability management and value
evaluation published in 2005.

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