In 1999, William Ford Jr. angered Ford Motor Co. executives and investors when he wrote that “there are very real conflicts between Ford’s current business practices, consumer choices and emerging views of (environmental) sustainability.” In his company citizenship report, the grandson of Henry Ford, then the automaker’s nonexecutive chairman, even appeared to endorse a Sierra Club statement declaring that “the gas-guzzling SUV is a rolling monument to environmental destruction.”
Bill Ford has had to moderate his strongest environmental beliefs since assuming the company’s CEO position in October 2001, just after the Firestone tire scandal. Nevertheless, while he has strived to improve Ford’s financial performance and restore trust among its diverse stakeholders, he remains strongly committed to corporate responsibility and environmental protection. In his words, “A good company delivers excellent products and services, and a great company does all that and strives to make the world a better place.”1
Today, Ford is a leader in producing vehicles that run on alternative sources of fuel, and it is performing as well as any of its major North American rivals, all of whom are involved in intense global competition. The new CEO is successfully pursuing a strategy that is producing improved financial performance, increased confidence in the brand and clear evidence that the car company is committed to contributing more broadly to society. Among Ford’s more notable outreach efforts are an innovative HIV/AIDS initiative in South Africa, which is now expanding to India, China and Thailand;2 a partnership with the U.S. National Parks Foundation to provide environmentally friendly transportation for park visitors;3 and significant support for the Clean Air Initiative for Asian Cities.4
Ford’s actions are emblematic of the corporate social responsibility (CSR) initiatives of many leading companies today. Corporate-supported social initiatives are now a given. For some time now, many Fortune 500 corporations have been creating senior management positions dedicated to helping their organizations “give back” more effectively. CSR is now almost universally embraced by top managers as an integral component of their executive roles, whether motivated by self-interest, altruism, strategic advantage or political gain.5 Their outreach is usually plain to see on the companies’ corporate Web sites.
Corporate social responsibility is high on the agenda at major executive gatherings such as the World Economic Forum.
1. “Ford Motor Company Encourages Elementary School Students to Support America’s National Parks,” April 17, 2003, www.ford.com/en/company/nationalParks.htm.
2. “The Threat of HIV/AIDS,” www.ford.com/en/company/about/corporateCitizenship/report/articlesThreatActions.htm.
3. “Ford’s First Hybrid SUV Helps Keep National Parks Green,” June 18, 2004, http://media.ford.com/newsroom/feature_display.cfm?release=18078.
4. “Ford Reaffirms Pledge for ‘Better World’ Through Its Support of the Clean Air Initiative for Asian Cities,” June 10, 2003, http://media.ford.com/newsroom/release_display_new.cfm?release=15634.
5. C. Smith, “The New Corporate Philanthropy,” Harvard Business Review 72, no. 3 (1994): 105–117; L. Campbell, C.S. Gulas and T.S. Gruca, “Corporate Giving Behavior and Decision-Maker Social Consciousness,” Journal of Business Ethics 19, no. 4 (May 1999): 375–384; V.C. Edmondson and A.B. Carroll, “Giving Back: An Examination of the Philanthropic Motivations, Orientations and Activities of Large Black-Owned Businesses,” Journal of Business Ethics 19, no. 2 (April 1999): 171–179; B. Shaw and F.R. Post, “A Moral Basis for Corporate Philanthropy,” Journal of Business Ethics 12, no. 10 (October 1993): 745–751; U.C.V. Haley, “Corporate Contributions as Managerial Masques: Reframing Corporate Contributions as Strategies to Influence Society,” Journal of Management Studies 28, no. 5 (1991): 485–509; and P. Navarro, “Why Do Firms Give to Charity?” Journal of Business 61, no. 1 (1998): 65–93.
6. C. Crook, “The Good Company,” The Economist, Jan. 20, 2005.
7. We use the term “collaborative social initiative” to refer to projects in which a corporation works with a not-for-profit toward improvement of societal welfare. Such collaboration could be between one company and one not-for-profit or, ideally, as part of a larger cooperative initiative as described above. See D. Hess, N. Rogovsky and T.W. Dunfee, “The Next Wave of Corporate Community Involvement,” California Management Review 44, no. 2 (winter 2002): 110–125. This is also consistent with the view of Burke and Logsdon, who argue for a “strategic” application of CSR in which the project is central to the firm mission — specific, proactive, visible and voluntary. See L. Burke and J.M. Logsdon, “How Corporate Social Responsibility Pays Off,” Long Range Planning 29 (1996): 495–502; and S. Waddock, “Building Successful Social Partnerships,” Sloan Management Review, 29, no. 4 (1988): 17–23. A similar recommendation appeared in Sloan Management Review over three decades ago. See J.A. Pearce II, “The Company Mission as a Strategic Tool,” Sloan Management Review 23, no. 3 (1982): 15–24.
8. We adapt the definition of CSR as explicated in A. McWilliams and D. Siegel, “Corporate Social Responsibility: A Theory of the Firm Perspective,” Academy of Management Review 26, no. 1 (January 2001): 117–127.
9. A. McWilliams and D. Siegel, “Corporate Social Responsibility and Financial Performance: Correlation or Misspecification?” Strategic Management Journal 21, no. 5 (May 2000): 603–609; L.E. Preston and D.P. O’Bannon, “The Corporate Social-Financial Performance Relationship: A Typology and Analysis,” Business and Society 36 (1997): 419–429; and P.A. Stanwick and S.D. Stanwick, “The Relationship Between Corporate Social Performance and Organizational Size, Financial Performance, and Environmental Performance: An Empirical Examination,” Journal of Business Ethics 17, no. 2 (January 1998): 195–204.
10. J.J. Griffin and J.F. Mahon, “The Corporate Social Performance and Corporate Financial Performance Debate: Twenty-Five Years of Incomparable Research,” Business and Society 36 (1997): 5–31; R.M. Roman, S. Hayibor and B.R. Agle, “The Relationship Between Social and Financial Performance: Repainting a Portrait,” Business and Society 38 (March 1999): 109–125; B.M. Ruf, K. Muralidhar, R.M. Brown, J.J. Janney and K. Paul, “An Empirical Investigation of the Relationship Between Change in Corporate Social Performance and Financial Performance: A Stakeholder Theory Perspective,” Journal of Business Ethics 32, no. 2 (July 2001): 143–157; J.D. Margolis and J. P. Walsh, “Misery Loves Companies: Rethinking Social Initiatives by Business,” Administrative Science Quarterly 48 (2003): 268–305; J.D. Margolis and J.P. Walsh, “People and Profits? The Search for a Link Between a Company’s Social and Financial Performance” (Mahwah, New Jersey: Lawrence Erlbaum Associates, 2001); G. Balabanis, H. Phillips and J. Lyall, “Corporate Social Responsibility and Economic Performance in the Top British Companies: Are They Linked?” European Business Review 98, no. 1 (1998): 25–44; and G. Moore, “Corporate Social and Financial Performance: An Investigation in the U.K. Supermarket Industry,” Journal of Business Ethics 34, no. 3/4 (December 2001): 299–315.
11. M. Orlitzky, F.L. Schmidt and S.L. Rynes, “Corporate Social and Financial Performance: A Meta-Analysis,” Organization Studies 24, no. 3 (2003): 403–441.
12. B. Husted, “Governance Choices for Corporate Social Responsibility: To Contribute, Collaborate or Internalize?” Long Range Planning 36, no. 5 (2003): 481–498.
13. T.A. Badger, “Levi Strauss Closes Its Last U.S. Sewing Plants,” Associated Press, Jan. 9, 2004.
14. N.C. Smith, “Corporate Social Responsibility: Whether or How?” California Management Review 45, no. 4 (summer 2003): 52–76.
15. Husted, “Governance Choices for Corporate Social Responsibility.”
16. This research builds from our previous studies of resource sharing in alliances and the role of nonprofit, nongovernmental organizations in generating value for companies. See J.A. Pearce II and L. Hatfield, “Performance Effects of Alternative Joint Venture Resource Responsibility Structures,” Journal of Business Venturing 17, no. 4 (July 2002): 343–364; and J.P. Doh and H. Teegen, eds., “Globalization and NGOs: Transforming Business, Government, and Society” (Westport, Connecticut: Praeger Publishers, 2003). Also see D.A. Rondinelli and T. London, “How Corporations and Environmental Groups Cooperate: Assessing Cross-Sector Alliances and Collaborations,” Academy of Management Executive 17, no. 1 (February 2003): 61–76.
17. B. Kogut and U. Zander, “Knowledge of the Firm, Combinative Capabilities, and the Replication of Technology,” Organization Science 3, no. 3 (1992): 383–397.
18. Smith, “Corporate Social Responsibility.”
19. J. Hempel and S. Porges, “It Takes a Village — And a Consultant,” BusinessWeek, Sept. 4, 2004, p. 76.
20. B. McCann, interview with authors, Dec. 7, 2004.
21. Husted, “Governance Choices for Corporate Social Responsibility.”
22. R. Alsop. “The 18 Immutable Laws of Corporate Reputation: Creating, Protecting and Repairing Your Most Valuable Asset” (New York: Free Press, 2004).
24. “Welcome to The Home Depot Foundation,” www.homedepotfoundation.org.
25. S. Lazarus, J.A. Quelch, N. Roberts, A. Burgmans and O. Smith, “How Responsible Is Responsible Enough?” (panel discussion at World Economic Forum annual meeting, Jan. 28, 2005).
26. “Reinventing Education,” http://www.ibm.com/ibm/ibmgives/grant/education/programs/reinventing/re_school_reform.shtml.
27. W. Arulampalam and P. Stoneman, “An Investigation Into the Givings by Large Corporation Donors to UK Charities, 1979–1986,” Applied Economics 27 (1995): 935–945.
28. America’s Second Harvest, “Issue Papers,” www.secondharvest.org. Viewed Jan. 22, 2004.
29. K. Mundy, “Reduce Food Losses … Feed the Hungry,” Horizons 9, no. 4 (July/August 1997): 1–4; W.J. Clinton, “Memorandum on Food Recovery Efforts,” Weekly Compilation of Presidential Documents 32, no. 48 (Nov. 23, 1996): 2430–2431.
30. Alsop, “The 18 Immutable Laws of Corporate Reputation.”
31. Lazarus, “How Responsible Is Responsible Enough?”
32. The Catalyst Consortium, “Corporate Social Responsibility in Practice Casebook,” (July 2002): 8. Available at “Publications and Products” section, www.rhcatalyst.org.
33. Husted, “Governance Choices for Corporate Social Responsibility.”
34. Badger, “Levi Strauss Closes Its Last U.S. Sewing Plant.”
35. A. Trevino, “Are Companies Embracing Corporate Responsibility Principles as a New Strategy for Managing Reputation?” Corporate Citizen (2003), www.dsc.org.uk/corporatecitizen/aut00/research.htm.
36. Lazarus, “How Responsible Is Responsible Enough?”