This chapter explains the theories behind important concepts of networking, organization, and social responsibility. The chapter aims at giving the reader sufficient understanding of these concepts and how they are connected before outlining the empirical findings of this research in chapter four.
Organization versus Organizing
The conception of organizing is helpful when analyzing how individuals make use of available information and knowledge, through social interaction. According to Luhmann (1995, as referred to in Karlsson 2009), individuals come together to organize themselves by coordinating their activities when they are not capable of managing important challenges individually. Thus, individuals come together by organizing themselves as an attempt to reach a certain outcome and social order.
As can be understood, the action of organizing can take place in social interactions both within and outside organizations. The reason is simply that it is the individuals within the organizations, rather than the organizations as social structures, that organize themselves by interacting with others. The relevance of the exchange that takes place during these social interactions can have different value to the participants, even when they might have the same intentions of participating (Hodgson 2006; Hjern & Hull 1984; Luhmann 1995:74f as referred to in Karlsson 2009). Unlike the concept of organizing, organizations are regulated by instructions on what they are for and which activities that are to be used to accomplish these.
The difference between organizing and organization is, according to Luhmann (1995, as referred to in Karlsson 2009), that organizations are established to enforce order, while organizing is an action that can emerge independently of external enforcement (Knorr-Cetina et al. 2001, in Karlsson 2009). Organizing actions can thus give rise to the establishment of organizations, with regulations aiming at enforcing order, but does not necessarily have to.
Having explained the concept of organizing and organization, and how they differ from one another, the study now turns to look deeper into the two conceptions.
Organizations are composed by factors such as their name, brand, managerial structure, board, employees, and inventories (Hamrefors, 2009). Even though organizations are not visible to the eye, organizations can be held accounted as juridical persons. As a juridical person, an organization can enter agreements. Thus implying than an organization has both rights and obligations. According to Hamrefors (2009), organizations are so deeply rooted in our consciousness that they have become institutionalized. According to Hamrefors (2009), organizations are social constructions that will exist as long as people consider them to exist. Gabriel, Fineman, and Sims (2010) liken organizations to rivers:
“Like a river, an organization may appear static and calm if viewed on a map or from a helicopter. But this says little about those who are actually on or in the moving river, whether swimming, drowning or safely ensconced in boats.”
– (Gabriel et al., 2010, p. 1).
Hence, there is something more to organizations than meets the eye. As organizations are social constructions based on human interaction, organizational activities and operations are organized by the actors within the organization. Not by the organization itself. Gabriel et al. (2010, p. 9) differentiate between organization and organizing by defining the phenomenon of organizing as “a social, meaning-making process where order and disorder is in constant tension with one another, and where unpredictability is shaped and ‘managed”. In other words, to organize is to shape and manage unpredictability arising from constant tensions between order and disorder.
Hamrefors (2009) finds four fundamental characteristics for an organization in a social structure system. These are organizations as: (1) operational units, (2) hierarchical structures, trust-building actors, and (4) networking actors. It is the fourth characteristic, networking actors, which will be examined in this study. However, this study does not focus on organizations as networking actors, but rather on individuals networking within and across organizational boundaries.
According to Hamrefors (2009), organizations have always cooperated by networking. Additionally, networking is a naturally inherited part in human interaction. Yet, the significance of networking has increased dramatically during the past years. As can be understood from reviewing literature treating the phenomenon of networking, networks have had the aim to create additional value from the beginning. For a long time it was believed that organizations could be separated from their contexts and used to break down organizational functions in different categories.
On the contrary, Hamrefors (2009) means that, organizations have gone through a dramatic change during the past 20 years. This change is believed to have been caused by two factors: the emergence of information and communication technology (ICT), and (2) the significance of knowledge as a production function. The ICT has brought people closer to each other, by enabling networks to connect online, as well by streamlining information flows through the use of search engines. Actors that understand how to “co-think” with a resource can therefore have enormous use of that in its own relationship building (Hamrefors, 2009, p. 36).
The second factor, knowledge, is somewhat related to ICT as the Internet has enabled for easily finding alternative solutions to existing problems. ICT has therefore come to play an important role as an innovative force in the networks, giving rise to a situation where fewer organizations can create value by themselves and therefore have to take part of the knowledge exchange in the networks. This in turn leads to the emergence of a new type of production organization; value-networks (Hamrefors, 2009).
Social Responsibility (SR), or more commonly known as Corporate Social Responsibility (CSR) in the private sector, is a concept that has come to stay. Studies on social responsibility practiced by businesses first appeared within the framework of ethics in the early 20th century. According to the Institute of Medicine of the National Academies (Harrison & Coussens, 2007), the idea of CSR appeared in relation to the growth of business corporations. As the corporations grew in size, they consequently increased their significance in and impact on society.
Because CSR concerns both companies and public organizations, the International Organization for Standardization (ISO) expanded the CSR concept and included it in the notion of Social Responsibility (SIS, 2010). NGOs have naturally taken social responsibility and it has therefore not been necessary to label the action. However, with the increasing social pressure on companies to take their share of responsibility, ISO has decided to incorporate the notion of CSR in SR. The concept of SR will be established as an international standard this very year (2010) under the name ISO26000. The international standardization of social responsibility is carried out by the Brazilian standardization organization Associação Brasileira de Normas Técnicas (ABNT), and the Swedish Standards Institute (SIS). As this study investigates the significance of networking for socially responsible actors a more detailed presentation of SR will be provided below.
There is a never-ending debate on when the conceptualization of CSR first emerged. Some claim that it happened in the 18th century, due to companies acting in socially responsible manners by building houses and schools for their employees and their children (den Hond, de Bakker, & Neergaard, 2007). Others claim that it emerged in the 1920s with the development of “business welfare capitalism”, where hundreds of firms established social support systems for their employees. These social support systems could entail various benefits such as pensions, adult education, healthcare, and profit sharing plans (Childs, Martin, & Stitt-Gohdes, 2010). Apart from these two claims, there are also those who attribute the true beginning of CSR to the role of the businesses in the 1950s (Banerjee, 2007).
Whether we choose to trace the roots of CSR back to the 18th century, or to the 1950s, we can agree that globalization has taken the notion of CSR to another level. Globalization has increased the movement of capital, goods, ideas, and people dramatically. The movement of these factors, in turn, strengthened corporate activity and hence the significance of corporations in society. Media and the outbreak of the recent (2008) financial crisis are factors that also have contributed to the spread of CSR, through affecting consumer and shareholder behaviour (Borglund, 2009). Media has increased the pressure on companies to take their share of social responsibility by criticizing them in public. The financial crisis, on the other hand, is according to De Geer (2009) a direct result from the society’s distrust in the market and consequently in the companies.
Trust is important for companies, since their license to operate is dependent upon the stakeholders’ approval of their activities. The license to operate is not regulated by laws, but by the total sum of expectations on the company, in terms of (1) productivity, (2) return to capital owners and creditors, (3) job creation, (4) product-quality, and (5) economic and social effects of the business (De Geer, 2009). These expectations change over time and it is in the interest of the companies to live up to these expectations because they generate credibility and strengthen their Goodwill by doing so.
The Notion of Corporate Social Responsibility
According to Harrison and Coussens (2007), CSR is an ever-evolving concept, whose scope differs by company, industry, location, time, money, and knowledge. The concept of CSR first appeared as a part of business ethics, but later developed to its own branch. The notion of CSR refers to actions taken by companies to contribute to the welfare of society (Vachani, 2006). The idea that businesses should be held socially accountable has been widely criticised by the business community and economists, who claim that profit-maximization should be the only legitimate goal for businesses.
According to Borglund (2009), the conception of CSR barely existed in Sweden until the beginning of 2008. In Swedish Business Press, the number of articles written about CSR dramatically increased between the years 2008-2009 from a number of 25 to 120 published articles. Based on this fact Borglund (2009) draws the conclusion that Swedish journalists first discovered the concept of CSR in 2008. At the same time, the number of articles published in the Financial Times (FT) increased from just a few in the 1990s to a hundred during 2005.
According to Borglund (2009), CSR emerged as a response to irresponsible business, with the two main driving forces being resistance to globalization and investors. The anti-globalization movements reached its peak around the millennium shift (2000). The violent demonstrations in Seattle 1999, the G-8 meeting in Genoa 2001, and the EU Summit in Gothenburg (Sweden) 2001, criticized companies for allowing exploitation of companies in poor countries. By moving the production overseas, the companies did not only lower their costs of production, but also decreases the salaries of the workers in the West (as production was moved to low-income countries). As a result, workers in the west suffered losses, while top managers got rewarded for the structural changes that generated higher profits for the businesses. Listed companies therefore became symbols for poverty and global injustice. As agents for globalization, companies had to face the critique by showing the advantages of globalization.
NGOs played an important role in pushing companies to increase their share of responsibility towards society, by holding them accountable for their mistakes. Companies have been forced to address their mistakes to not lose their credibility as responsible actors. Many of the concerns that the NGOs raised later became accepted by the politicians, and by the enterprises. Accordingly, numerous initiatives and acts where established for companies to demonstrate their socially responsible actions.
The UN came to create an initiative called the Global Compact, where companies could become members to show that they were taking their share of social responsibility. Another example is the EUs Green Book, which became the foundation for the EU view on CSR. A third example of an initiative motivating companies to promote their socially responsible actions is the American Sarbane-Oxley Act (SOX). The law forces listed companies to certify that their interim reports and other financial information are not misleading. In short, CSR has become a key for distinguishing ‘good’ companies from ‘bad’.
Apart from the anti-globalization movements, the emergence of socially responsible investors has also played a big role in the development of CSR. Even though the phenomenon of ethical investments is not a new concept, its breakthrough came in recent years. According to Borglund (2009), the concept developed during the 1960s and 1970s in the USA, mainly by the Methodist church, but also by universities, and other public investors using their investments to exercise pressure on companies operating in South Africa during Apartheid in the 1980s (Borglund, 2009).
During the 1990s, the market for ethical investments expanded and left room for ethical stock indexes such as the Dow Jones Sustainability Index, the British FTSE4Good, and the French index Ethibel; examples of influential ethical indexes attractive for ethical investors. According to Borglund (2009), the development of responsible investments has made it hard for listed companies not to address issues related to CSR. The majority of the listed companies therefore choose to work with CSR, since the generated profit is greater than the short-term gains made by ignoring CSR issues. Summing up, not only did CSR increase the awareness of addressing social issues, but it has also become an important factor for increasing the financial value, of companies.
One last factor in the development of the CSR trend worth mentioning is media. According to Borglund (2009) media has been an important factor for pushing companies to take their share of social responsibility. Companies are driven by profit, which they generate by selling a product or a service to customers. There are many companies competing for the same customers, causing companies to be extremely dependent on their brand image. This image is highly sensitive to company values and actions. A failure to live up to the expectation of the customer of maintaining a certain image, will therefore lead a company to its downfall. Companies prefer to address issues related to CSR to avoid being criticized in media, since it is harmful to their business.
Organizing Social Responsibility
According to Vachani (2006), CSR activities are likely to include the exchange of resources between actors within NGOs and corporations. Coca-Cola and PepsiCo cooperate with the Carbon Trust, established by the U.K. government to help the community to move forward to a low-carbon economy (Coca-Cola, 2009; PepsiCo, 2008). Chiquita collaborates with the Rainforest Alliance (RFA) in modifying their banana field to protect the plants and specious living there, and using fewer pesticides (Chiquita, 2010). Nestlé and Marabou also cooperate with the RFA to certify their Nestlé Nespresso coffee and Marabou Premium chocolate respectively (Rainforest Alliance, 2009).
It is this exchange that has motivated the author of this study to investigate networking and its significance for actors working with social responsibility. That is, actors organizing themselves with others within and across organizational boundaries to perform socially responsible actions. Networks are established for the purpose of enabling the exchange of resources such as knowledge, ideas, contacts, and experiences with other actors. These networks are then said to generate additional value. This thesis consequently focuses on finding what value that is generated by networking, and where this value is added. In order to approach this problematic, this study examines three networks that address socially responsible issues. By examining these networks, this study attempts to find the significance of value-creating networking for actors organizing themselves to take socially responsible actions.
The phenomenon of networking has always been a natural part of human interaction. However, the idea of networking had its breakthrough with the emergence of the Information and Communication Technology (ICT), and the increased significance of knowledge as a production function (Hamrefors, 2009). Because of these two developments, attention moved from networking as a means for relationship building to networking as a means for value-creation. What differentiates the ‘new’ notion of networking from the ‘old’ is the exchange of knowledge. The ICT technology expanded and facilitated the sharing of knowledge, such as information and expertise, on a global scale (Hamrefors, 2009). The ICT moved individuals closer to one another, and thus opened up new possibilities for development based on value creation.
Consequently, organizations are facing a hard time generating additional value on their own. Organizations, or rather individuals within the organizations, therefore pursue part of their relationship building in various networks, to generate additional value to their respective organization.
The value that is created is believed to be increased knowledge or information about a specific topic, issue, or situation. According to Karlsson (2009), individuals open themselves when they exchange information, and close themselves when they go home and reflect upon the information, ideas, and thoughts exchanged. The same information has different importance and value to the actors. Researchers have therefore found that individuals, even though they share information, knowledge, resources, and experiences with others use it in different way depending on their own knowledge, experiences, and situations.
Organization versus Organizing
About the Networks Future Earth, Health and Democracy and Mission Health
Early History of the Network Future Earth
Early History of the Network Health and Democracy and the Network Mission Health
Networking in a Socially Responsible Context
Networking in a Socially Responsible Context
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The Quest for Value-Creating Networking