Editorial Advancing Corporate Sustainability, CSR, and Business Ethics

Business & Professional Ethics Journal, 33:4, 2015

pp. 287–296

doi: 10.5840/bpej201512118 Online First: February 7, 2015

Editorial Advancing Corporate Sustainability, CSR, and Business Ethics Erik G. Hansen Leuphana University of Lüneburg, Germany, Centre for Sustainability Management (CSM)

Dimitar Zvezdov Friedrich-Alexander University Erlangen-Nürnberg (FAU), Germany

Dorli Harms Leuphana University of Lüneburg, Germany, Centre for Sustainability Management (CSM)

Gilbert Lenssen The Academy of Business in Society (ABIS), Brussels, Belgium

Abstract: Environmental, social and ethical issues have become increasingly important for businesses due to changed customer expectations, more regulation and stakeholder pressure, amongst others. This led to the development of concepts such as sustainability management, corporate social responsibility (CSR), stakeholder management and business ethics. Though mostly developed in isolation, scholars have increasingly worked on their integration. This editorial sheds light on (missing) overlaps between these concepts. We find that sustainability management and CSR have become more integrated and are increasingly grounded in an “embedded view“ in which business and society is part of (and constrained by) the natural environment. In contrast, business ethics has not been integrated to the same extent, expect for the subfield of environmental ethics. After this general overview, we introduce the individual contributions to the special issue which are advancing the conceptual and empirical foundation of sustainability management, CSR, and business ethics. Key Words: business and society, corporate sustainability, CSR, business ethics, sustainability management, education, sustainable university, planetary boundaries

© Business & Professional Ethics Journal. ISSN 0277-2027. Correspondence may be sent to Erik G. Hansen, [email protected]

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Introduction We are delighted to introduce this special issue on “Advancing Corporate Sustainability, CSR, and Business Ethics.” The overall theme of this special issue reflects our aim to bring together scholars with the (normative) ambition to contribute to improving the lives of people, protecting the natural environment, and ultimately making the world a better place. Though investigating similar phenomena, scholars in corporate sustainability, CSR, and business ethics have often adopted different perspectives and have therefore resorted to their isolated communities and intellectual silos. However, a closer look at extant research on businesses and societies also makes clear that there is a great potential for finding common ground. Against this background, it is our explicit goal to interconnect these communities so that they can share their knowledge and interpretations. This was also the aim of the Academy of Business in Society (ABIS) Doctoral Summer School 2013—hosted by the Centre for Sustainability Management (CSM) at Leuphana University of Lüneburg, Germany—which served as the catalyst for the contributions in this special issue. Before we introduce the individual papers of this special issue, we would like to briefly outline the divides between and bridges across the various segments in the business and society field. Corporate Sustainability, CSR, and Business Ethics Corporate sustainability, corporate social responsibility (CSR) and business ethics share a few common characteristics and span across the larger “business and society” field. Various attempts have been made to combine and integrate these perspectives, such as Schwartz and Carroll’s (2008) value, balance, and accountability (VBA) model. Whereas their approach can be seen as a promising starting point for the challenging adventure of integrating the partially overlapping streams of business and society, the model has not succeeded in resolving the inherent divide between sustainability respectively CSR on the one hand and business ethics on the other. The Normative Cores of the Business and Society Field

Earlier attempts at bridging the gaps between the aforementioned areas have become reference for researchers in all three domains. Probably most notable is Donaldson and Preston’s (1995) contribution, which proposes three perspectives: an instrumental, a descriptive and a normative one. Although their seminal work has adopted a stakeholder perspective, their line of argument can be extended to theories of the business and society field in general. Most notable is,

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however, the conclusion that the various perspectives are all based on a “normative core” (ibid., 66). The existence and importance of a normative core can be considered the best common denominator for the different domains within the business and society field. Yet, applying Donaldson and Preston’s findings to the larger business and society field, the contents of the normative core(s) of each of our three sub-domains—corporate sustainability, CSR, and business ethics— differ or at least display different courses of development: Corporate sustainability with its reference to “sustainability” is considered to be at least 300 years old and dates back to the Saxon mining administrator Hans Carl von Carlowitz, and his work on sustainable forestry management (“Sylvicultura oeconomica”) in 1732 (Carlowitz 1732; Warde 2011). More recently, the term sustainability was incorporated into the concept of “sustainable development” as developed by the by the United Nations commission on Environment and Development, known as the Brundtland Commission (World Commission on Environment and Development 1987). The report entitled “Our Common Future” defines sustainable development as “the development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (ibid., 54), but which also explicitly links development with the protection of the natural environment: “Environment and development are not separate challenges; they are inexorably linked. Development cannot subsist upon a deteriorating environmental resource base; the environment cannot be protected when growth leaves out of account the costs of environmental destruction.” (ibid., 48). “Corporate sustainability” then describes the contribution of businesses to sustainable development, which is different to, but also includes a firm’s own development so that it can strive in the long-term (Schaltegger and Burritt 2005). CSR. As thoroughly reviewed (e.g., Carroll 1999), CSR is a concept which sprang up in the 1950s in the United States from an understanding of “social responsibilities” of businesses and the implications of their decisions on society. It is these early American works that mark CSR’s focus on social issues and its anthropocentric orientation. For example, early definitions as screened by Carroll (ibid.) relate to “the social system,” “corporate philanthropy,” “community engagement,” and how “actions of . . . firms touched the lives of citizens.” As described in the following section, only later did issues related to the natural environment find their way into CSR. Business ethics refer to the general notion of “morality” and has its roots in the domain of (traditional) philosophy or theology or in the community of business itself (e.g., Dienhart and Curnutt 1998; Wry 2009; Franks and Spalding

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Business and Professional Ethics Journal Corporate social responsibility (CSR)

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Figure 1: Merging fields of corporate sustainability and CSR (based on Loew et al. 2004, 12; for a thorough review see also Hansen 2010, 8–27).

2013). For example, business ethics often refers to normative concepts developed by early European philosophers, such as Immanuel Kant or Aristotle (e.g., Schwartz and Carroll 2008; see also Hansen and Schaltegger [forthcoming] for a review of normative cores in the context of performance management and measurement systems) and applies these to study contemporary businesses. In summary, the above paragraphs show that although the three concepts are based upon normative cores, the source of the normative cores differ. Yet, various developments have led these to converge. A New Attempt for Integrating the Business and Society Field

Starting from different assumptions and in different geographical contexts, corporate sustainability and CSR have undergone continuous merging during the past decades (see Figure 1). Moreover, beyond the rather simplistic “triple bottom line” approach originally popularized by Elkington (1998), there is an increasing understanding of the complex interdependencies between businesses, the social context, and the natural environment. Accordingly, both corporate sustainability and CSR have increasingly recognised the embeddedness of the economic and social systems and related actors in the natural environment. This is rendered evident in the article by Marcus, Kurucz, and Colbert (2010), in which they propose an “embedded view” on the business-society-natural environment link (Figure 2).


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Figure 2: From disparate to embedded view of the natural and society interface (Marcus, Kurucz, and Colbert 2010, 406).

It seems though that the seemingly integrated understanding of corporate sustainability and CSR nonetheless often remains distant from developments in the area of business ethics. Although business ethics deals with moral questions of businesses and individuals within businesses, it remains a strongly anthropologic concept. Often, there is no (explicit) recognition of the natural environment—which is probably because Aristotle (as an example of a normative core) did not refer so much to the values of the natural environment since global environmental degradation was not an issue. Comparable thoughts probably led Starik (1995) to his contribution in the domain of stakeholder management by the question “Should trees have managerial standing?” Also, a new field of environmental ethics has emerged—dating back to the 1970s—which refers to “the study of ethical questions raised by human relationships with the nonhuman environment” (Palmer, McShane, and Sandler 2014, 420). We therefore believe that a stronger integration of all domains within the business and society field on the basis of the limits of our natural environment (or planetary boundaries; Whiteman, Walker, and Perego 2013) is both possible and promising. This is probably also reflected in Ehrenfeld’s (2008) book on Sustainability by Design in which he highlights the ethical dimension of sustainability: Flourishing [his new term for sustainability] can occur only if we pay close attention to the three critical domains that the forces of modernity have dimmed:

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• Our sense of ourselves as human beings: the human domain. • Our sense of our place in the [natural] world: the natural domain. • Our sense of doing the right thing: the ethical domain. These three domains form a set of overlapping fields that underlie any activity designed to produce sustainability. (Ehrenfeld 2008, 58)

Against this background, studying corporate sustainability, CSR, and ethics on the level of corporate governance (Lenssen, Bevan, and Fontrodona 2010; Lüdeke-Freund and Zvezdov 2013; Spitzeck and Hansen 2010), leadership systems (Hansen 2010), accounting and performance management (Hansen and Schaltegger, forthcoming; Zvezdov 2012), new products, services and business models (Hansen, Große-Dunker, and Reichwald 2009), and entire supply chains (Harms, Hansen, and Schaltegger 2013), amongst others, seems to be a fruitful endeavour. Bringing engaged individuals from these different research fields together to discuss theses and related questions was the aim of the ABIS Doctoral Summer School and this special issue. The ABIS and Leuphana Doctoral Summer School To bridge the research gap between the different sub-domains discussed above, ABIS collaborated with the Centre for Sustainability Management (CSM) of the Leuphana University in Lüneburg, Germany to organise the first ABIS Doctoral Summer School in September 2013. The twenty-five participating doctoral students had the opportunity to develop their ideas with fellow researchers and with senior academic staff. Among the business ethics mentors were Edward Freeman (The Darden School, University of Virginia), Mollie Painter-Morland (Nottingham Business School), Joan Fontrodona (IESE Business School), Patricia Werhane (DePaul University) and Waymond Rodgers (Hull University Business School), whereas young researchers in the area of sustainability management were intensively supported by Frank Boons (Erasmus University Rotterdam), Marcus Wagner (University of Würzburg), Timo Busch (ETH Zurich), Stefan Schaltegger, and Erik G. Hansen (both of Leuphana University of Lüneburg). A variety of sessions enabled students to present their work and receive feedback from peers and seniors. Plenary sessions addressed specific issues related to both conducting research and managing a Ph.D. dissertation project. In addition to the knowledge gained, the students were also offered the possibility to develop current paper projects and submit them to this special issue of the Business and Professional Ethics Journal. Undergoing the review process while


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staying in contact with their mentors was a valuable and productive experience for the doctoral students. Contributions in this Special Issue Supported by intensive mentoring during and after the aforementioned ABIS Doctoral Summer School four particularly inspiring Ph.D. papers (partly with collaboration by senior researchers) found their way into this special issue. First, the contribution by Strathoff reflects on the notion of value creation in the business and society field. Starting with a discussion of Schwartz and Carroll’s VBA model and combining this with the concept of public value the conceptual paper aims at proposing an extended notion of value creation as well as presenting a public value-balance-accountability-framework. As a consequence, this contribution offers an overview of the business and society field and their linkages. The second contribution, by Blumberg and Nick Lin-Hi, deals with the business case of CSR, its critique and how it can lead to irresponsible management practices. As discussed previously, the instrumental perspective of CSR has been a powerful driver for managers to revisit their stance towards the concept. In other words, managers have sought to engage with CSR in the pursuit of pay offs. However, the pursuit of business cases for CSR might tempt managers to overemphasize those CSR activities that allow to link the associated costs and benefits ex ante reliably. This renders CSR activities related to the voluntary engagement for society (“doing good”) more attractive than CSR activities that seek to prevent irresponsible behaviour (“avoiding bad”). Why such behaviour increases the risk of irresponsible business practices is discussed. Driven by the issue resulting from the lack of consensus as to what CSR encompasses from the theoretical level, the third contribution, by Vashchenko, investigates empirically how CSR is operationalized in individual companies and, more specifically, the set of activities or practices a company pursues. By means of investigating their external reporting over a period of five years, the paper performs a longitudinal study of organizational “CSR portfolios” which represent sets or configurations of CSR activities. The contribution by Dziubaniuk focusses on trust in marketing. By addressing the specifics of search engine marketing as a common online marketing service and trustworthiness in business relationships the paper provides an ethicoriented analysis of online marketing activities. The empirical data as well as the discussion advance the understanding of trust in business relationships formed in the context of digital business. By adopting the risk, opportunity, activity, and

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