Intrinsic CSR and Competition

In the light of numerous well-publicised problems and scandals involving large corporations whose highly formalised CSR systems failed to prevent anti-social and illegal behaviour, there is growing interest in informal processes and relationships that foster organisational cultures that embed and exemplify Corporate Social Responsibility (CSR). CSR frameworks worldwide have been dominated by the concerns and distinctive needs of large companies and by efforts to manage CSR through a management system. However, there is a new story of business that is emerging post global financial crisis. There is a renewed interest in revisioning business to make it more compatible with human aims. It is proposed that detailed section of Small and Medium-sized Enterprises (SMEs) with informal and non-systematic approaches to CSR can shed light on these issues of cultural embedding of CSR values. Accordingly, this section focuses on the one hand on Germany and the principles of Honourable Merchants, a thousand-year tradition, that have been reinforced and revitalised after economic crises in the private and public sector. Further, case studies of Swiss SMEs investigate the processes, values, and relationships that make up informal CSR oriented organisational cultures. Thus, it aims at identifying key drivers and dynamics of different management systems as well as business models.

In economics, the principles of Honourable Merchants are embedded in the wider research area of Corporate Social Responsibility (CSR) which focuses on the relationship between current economic and social policy as well as business and it promotes measures to oblige companies to develop their own responses towards such policy as well as to regularly communicate (positive as well as negative) impacts of their business activity on the economy, the environment and society. For the understanding of the principles of Honourable Merchants and for the assessment of the transferability to modern entrepreneurship, the historical genesis and evolution of the Principles are of central importance. The following chapter explores the millennium of the Principles of Honourable Merchants and transforms these into a contemporary model of corporate responsibility towards society. The paper concludes with the observation that responsible leadership as prescribed by the Principles will continue to be a successful recipe for sustainably promoting and assuring economic and social progress.

Many Small and Medium-sized Enterprises (SMEs) in Switzerland have highly sophisticated Corporate Social Responsibility (CSR) agendas. In many cases, they are unintended, informal as they are coming from corporate cultures that nurture a “raison d’être” and a noble business purpose beyond profit-maximisation. Previous research aggregated this core logic to an overarching SME business model, L’EPOQuE, making Swiss SMEs, arguably, hidden CSR champions about social, economic, and environmental responsibilities. This model is borne by a set of key features: i.e., the process of work socialisation, soft assets, proximity and informality, agility, the nexus of company ownership and government, the focus on education, and long-range planning. By the methods of focus group discussion with seven SME owner-managers combined with case studies located in the French-speaking part of Switzerland, this research looked at the impact of different financial crisis on the Swiss CSR business model. The results show surprisingly strongly, that there is no substantial leverage. The psychological and sociological tradition of stewardship and the SMEs’ emphasis on excellent craftsmanship help sustain morale and ethics despite economic downturns. As their business model evolves from CSR as “moral activity” it prevents the potential sacrifice of ethics due to financial scarcity. At the same time, it mirrors a highly competitive business approach that can be generalised to other unconventional, “non-standard” milieus where money might be short (e.g., in start-up companies). Considering the economic, political, and social competitiveness of Swiss SMEs and their relevance within CSR, this study demonstrates the power of the small business approach as it works detached from economic situations.

If you live in Switzerland, Austria, Japan, Sweden, Finland, most of Germany and parts of Italy then you can return to your coffee, muesli and eggs. If you live in the UK, the US or any other country with a chronic record of shoddy building practices and poor workmanship, then read on.

In the last three decades business ethics has gained an increasing popularity among academics. Moreover, in recent years, virtue-related concepts have been of considerable interest to philosophers, psychological researchers, and practitioners in the business ethics field and several approaches to character traits have been used to incorporate ethics into organizations. Virtue ethics emphasizes integrity at a personal, business, and community level and aims at developing a virtuous character of the acting subject in order to improve the trustworthy relationship to the different stakeholders. Within the Corporate Social Responsibility (CSR) context, integrity is connected to entrepreneurs and managers’ motivations that drive toward an intrinsic orientation. Coherently, approaches focussed on intrinsic motivation toward sustainability and CSR programs have been attracting the attention of the scientific, political, and business community, while a growing body of research argues for the need to address both internal and external drivers. Being that organizational practices include both a formal and an informal dimension, integrity can act a tool of managerial control based on the sharing of organizational values and virtues. Therefore, the virtue ethics perspective allows to conceptualize the normative aspects of virtuous competence that constitutes the good character of the entrepreneur/manager applied to the decision-making process, thus overcoming the limits of legal compliance programs and enhancing managerial control of behaviors.

This sub-section will address the connection between virtue ethics with corporate identity and the success of an enterprise. It assesses to what extent an employees’ virtue-ethical behavior established within the culture of an enterprise can shape its corporate identity and, hence, also influence its success. The following lines highlight the importance of virtue (aretaic) ethics for successful companies. This is complemented with utility (utilitarian) ethics and duty (deontological) ethics. These three approaches combined have the potential to sustainably inspire ethically responsible actions. The example of VW’s emission scandal will illustrate how far vicious behavior can cause stakeholders’ mistrust and thus tremendous transaction costs and reputation damage. Secondly, the effects of virtue ethics to establish a sustainably responsible culture will be outlined. Thirdly, some methods to establish a virtuous corporate identity attractive for most stakeholders will be discussed.

The book chapter explores business ethics insights of a virtue ethics orientation to add a normative component to empirical research on CSR concerned with intrinsic and extrinsic drivers for organizational social performance. It argues that we need to adopt a broader perspective concerning the intrinsic motivations of business organizations to pursue goals that go beyond short-term, basic economic performance and strive for long-term, sustainable performance. This broader perspective can be achieved by taking into account the overall organizational internal context that stimulates both managers and employees to engage in ethical behaviour. The chapter thus appeals to the organizational virtues developed by the Corporate Ethical Virtues to assess whether an organization is intrinsically motivated to be socially responsible. To this end, it analyses how the virtues embedded by the organizational context foster organizational virtuousness, which is interpreted as an intrinsic driver for organizational ethical performance. This is further correlated with CSR reporting guidelines, interpreted as an extrinsic driver for organizational social performance. The chapter argues that organizations need to address both of them in order to reach a desirable level of long-term, sustainable performance, with the good news that both can be improved through ongoing practice.

This chapter focuses on the Italian company Loccioni as a case study of a Socially Responsible Enterprise which pays attention to its surrounding environment taking care of its needs and the needs of its inhabitants. To improve, to achieve success and guarantee its growth and the growth of the community around, Loccioni develops many different projects with regional schools aimed at hosting and training students because it wants that young people meet early the labour market. Loccioni Group is a real example of a socially responsible enterprise. The Italian company is a laboratory that used to open its doors to schools of the territory, offering technological challenges for the present and the future that is yet to come.

In SMEs the orientation towards Corporate Social Responsibility (CSR) is usually triggered by entrepreneurs’ values and beliefs. Accordingly, the main objective of this section is to point out, through exploring a case study - BoxMarche- how SMEs can successfully perform authentic socially-oriented strategies in that actions align with stated values and are triggered by the entrepreneur’s inwardly-derived values. The hypothesis underlying the study is that particularly among SMEs, the orientation toward CSR is intrinsically driven since it is triggered by the entrepreneur who is inspired by personal and family values and virtues tied to cultural and social variables that are typical of the territory he belongs to. The case-study first aims to point out the key values experiences by the manager/entrepreneur and translated into the company mission. Secondly, the coherence among the mission-governance-accountability dimensions will be analysed. Third, attention has been focused on specific virtues - the cardinal virtues - and on how they affect relationships with stakeholders and are applied in the business context rendering authentic the CSR orientation.

Arguably, within Corporate Social Responsibility (CSR) the intrinsic motive is more significant than the extrinsic because the former induces a stronger involvement. Others showed that a behaviour attributed to extrinsic motives is mostly perceived as dishonest and misleading. This highlights how important the underlying motivation is for the perception, and thus, design and effectiveness of CSR frameworks. This study discusses these divergent motives with two focus groups: together with seven owner-managers of Small and Medium-sized Enterprises (SMEs) and seven managers of large companies. The results show that CSR implementation in Swiss SMEs is related more strongly to moral commitment than to profit-maximisation. Accordingly, small business CSR emerges from the nexus of mission and value-set and the sociological tradition of the stewardship concept. This contrasts the extrinsically motivated approach of the large companies under research. In sum, this study showed that CSR is meaningful and justifiable even if it is not profitable in the first place.

This chapter wants to describe the case that represents the implementation of the passage from weak Corporate social responsibility (CSR) to strong CSR. The case is of “Loppiano Prima”. Loppiano Prima is a small cooperative and from 2004 took the name: “Fattoria Loppiano” and at present is continuing its agricultural activity. I chose this case, because its start up, history and dynamics of governance, represent the implementation of communion and fraternity principles. The period considered is up to 2007, because it had been a very interesting management problem to solve and the decision-making process showed the dimensions of strong CSR and intrinsic motivations.

The chapter focuses on a particular type of family business, belonging to the Economy of Communion (EoC) project. The EoC project involves entrepreneurs of different cultures and religions, companies, associations, social organization (including workers, managers, consumers, investors, scholars, poor people, private citizens and families) in concretely developing a new economic model and a new way of conceiving and implementing business management, labor and economic relations. This membership renders the case study particularly interesting, since it represents a family business driven by ideal-motives tied to the principles of the Catholic “Focolare Movement” set up by the charisma of Chiara Lubich. If non-financial goals of family businesses represent a feature useful to explain their orientation toward sustainability, in the selected case a further variable, namely the adhesion to the EoC project, reinforces such orientation rendering it an expression of “strong sustainability.”

“Good businessmen” and “good entrepreneurs” as business owners, founders and managers involved in firms and society and not motivated by their own profit and benefit are required in the current economic situation resulting from the greed of individuals. Owner-managers as well as entrepreneurs play crucial roles in a direct way in their companies but also in an indirect way for society as they contribute by innovation, as employer, by economic, social and environmental responsibility. Especially since the financial market crisis, the call for responsible corporate management and for an honourable corporate leadership has become urgent. This chapter points out that in times of significant social, economic, environmental, political, technical changes and/or crises—informal, but individually responsible leadership, as in most cases found in SMEs demonstrate their strengths, beneficial effects on society, however, also their weaknesses or needs for improvements.

This section presents a case-study relative to an Italian large Group, Brunello Cucinelli, that is of particular interest for its business model and the path of growth, characterized by a coherent and authentic CSR orientation. Sustainability of growth and healthy profitability are distinctive features of the Cucinelli Group. In pursuing the “humanistic enterprise” people work to achieve a shared objective adhering to a system of “soft” intangible values that represent the living core of the entire Group. The study employs a qualitative research approach. Firstly, it provides a brief description of the company; secondly, attention addresses the humanistic enterprise model and the leadership style. Finally, conclusions summarize the most relevant insights emerged from the case that represents an example of a sustainable growth and “a gentle capitalism”.

This chapter focuses attention on several innovations in corporate governance, that are analysed in Economy of Communion enterprises (EoC). EoC enterprises project was born in Brazil on 1991 to implement in economy and business the “culture of giving” in opposition to the “culture of having”. The EoC project is a tool to pursue the broader objective to develop and to reach, all over the world, the fraternity culture, that had its origins inside of the Focolare Movement. During more then 25 years of the project, EoC parks had been created all over the world to experiment and to develop reciprocity, trust and dialogue among enterprises, that take part in it. Those are firstly considered communities of people. In this work, we focus the attention on the case of Polo Spartaco-Brazil.

This section is aimed to present the case of SGR Group, an Italian oil and gas company that represents an exemplary case of CSR and an innovative path of business sustainability orientation driven by a set of shared values. These values—drawn from the entrepreneurial and managerial team—shape the organizational culture and lie at the base of an intrinsic CSR approach. Moreover, the values system enhances the capability of the Group to play a key role within the local community in spreading the culture of sustainability among its stakeholders, and triggering innovative project in collaboration with a network formed by actors belonging to the socio-economic context, such as schools, universities, public institutions, not for profit and civic organizations. The analysis of the case allows us to affirm that SGR is a company that contributes to create, through its activity, a more civil economy and to progress the eco-efficiency and eco-justice through social and environmental education projects addressed to young generations.

Within the Human Resources (HR) management field, a number of writers have considered various aspects of the working environment that should be taken into account by staffing strategy and policy. HR management is concerned with people, culture, incentives, and control. Therefore, it should be congruent with the chosen strategy. As the last chapters show, there is a chain-linking, particularly regarding the nexus of growth, strategy, innovation with a company’s approach, manifestation, and culture of Corporate Social Responsibility (CSR)-related values and virtues. The chapter summarizes the literature dealing with international HR tasks that is important to introduce the next case study that presents an internationally operating, innovation-driven start-up company broadly breaks down into tasks relating to the preparation and training of expatriates as well as further organizational issues such as the integration of employees from abroad and culturally related compensation issues.

In recent years, boundaries between profit and non-profit company forms and assessments are increasingly blurred, converging towards new types of hybrid organizations that mix elements, value systems and action logics of various sectors of society. On the one hand, we find organizations employed in the social industry that behave in a more business-like way and, on the other, business organizations that progress a social agenda in addition to their for-profit objective. Benefit Corporations and B Corps, with their reinforced commitment to corporate social responsibility (CSR) practices and a mission to generate a public benefit, are a clear example of the convergence of for-profit companies toward a strong CSR focus. For sustainable outputs to be valid, it is essential to have not only the right practices in place but the correct employee understanding of those practices. Companies need to become aware of the power of knowledge, learn what circumstances are likely to cause wrong opinions and learn how to manage their employee perceptions. The study aims to evaluate employee perceptions in an innovation-driven small and medium-sized enterprise through an empirical case study on D-Orbit, a high-tech certified Benefit Corporation. To achieve this goal, D-Orbit’s Benefit Reports and Annual Impact Report were analyzed and an in-depth interview with D-Orbit’s Quality and Impact Manager was carried out. Future research utilizes this case as a pilot to refine data content and procedure.

Many studies point to Small and Medium-sized Enterprises (SMEs) as a crucial actor within Corporate Social Responsibility (CSR) with high engagement due to personal, trust-based values, and a regional anchor. This regional foundation seems to effectively punish irresponsible practices. Because such idiosyncrasies are reported from ample countries this situation should be further investigated to better understand SMEs’ social impact far beyond explicit and formal CSR systems. Therefore, this section investigates the European SME–CSR nexus. Namely, it asks: Is there a global approach to CSR that can be found in SMEs from different cultural backgrounds, independent from their market economies, language regions, religion, legal/political systems? Or are there regional approaches to CSR and if so, what are their origins or determinants? Might they eventually be local culture, political habits, or markets? To what extent do the identified CSR agendas allow categorisation according to explicit/implicit CSR? Other cross-national studies mainly looked at Multinational Enterprises (MNEs) or focus on differences in governmental policies fostering CSR but seldom on CSR in SMEs in relation to their economic and cultural background. This section seeks to close this gap by enabling an understanding of how parameters such as supranational SME values and tradition rather than market economy or institutional frameworks influence small business CSR.

The most common Small and Medium-sized Enterprises (SMEs) form is the owner—or family-managed company, where ownership and the centre of control are congruent. Hence, the entrepreneur (sole owner or circle of persons) has the legitimacy to decide upon company resources, Corporate Social Responsibility (CSR)-related programmes included. Although SMEs often have less formalised control systems and reports and fewer control procedures, they have a strictly long-term orientation based on trust and reputation needs. The development of an ethical entrepreneurial groundwork by experience points consequently to the guidance by virtues (i.e. practical wisdom, justice, friendship, courage and temperance) and morale. Considering the above, more research is needed to explore further efforts on CSR virtues and on how these virtues can be applied in the Swiss small business context where trust-based values drive the business that strongly relies on reciprocal, trust-based deals, such as in the selected case relative to RC Tritec, a typical Swiss small-sized company.

This chapter provides a synthesis and conclusion over the book chapters. It does so by reporting on a content analysis of the book chapters and case studies published in this volume. It could be shown that intrinsic Corporate Social Responsibility (CSR) is rooted in the ethics of individuals, usually starting with the owner-manager, but permeated through culture across the organisation. In addition, these intrinsic motives are often tacit, difficult to espouse and somewhat separate from profit-maximising endeavours. However, their efficacy in achieving corporate success is proven—no reason was found why intrinsic motives and their enactment in CSR and business practices are an impediment to competitiveness, or to providing sufficient innovation dynamics towards persistent product and process development. What is observable is the specific coexistence of ethical motives and motivation with suitable business models, so where the 1970s Contingency Theory suggested internal organisational structures to be contingent with external factors, here it appears that business models shape around pre-existing ethical motives and value-based propositions. And as the interest in new business models, built on ethics, morale, intrinsic motivations implicit communication, has increased since the many financial and state crises over the last decade, the hope is that such legitimate practice may offer an alternative pathway towards genuine social responsibility of companies. The time for Small and Medium-sized Enterprises (SMEs) to become genuine beacons of inspiration seems to have come.