Satisfy without Sacrifice : A qualitative study about how the increased awareness among customers and consumers affect corporations´strategic CSR in the Swedish food industry

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Satisfy without Sacrifice

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A qualitative study about how the increased awareness among customers and

consumers affect corporations’ strategic CSR in the Swedish food industry

BACHELOR DEGREE PROJECT THESIS WITHIN: Business Administration NUMBER OF CREDITS: 15 ECTS

PROGRAMME OF STUDY: Degree of Bachelor of Science in Business Administration and Economics

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Acknowledgements

The authors of this research want to express their appreciation to individuals and corporations that have supported, motivated and guided them in the thesis process.

Firstly, we would like to express our gratitude to our tutor Oskar Eng, who has supported and guided us throughout the process by continuously contributing with relevant feedback. Further, we want to thank for the inspiration and calming words in stressful times. Also, we

want to thank the seminar group for relevant and helpful feedback.

Secondly, we would like to express our thankfulness to the corporations who took valuable time and participated in the interview process. Their relevant expertise and insights

contributed with valuable information for the authors to accomplish the thesis.

Finally, we would like to express our gratitude to Jönköping University and the course director of the thesis project Anders Melander who has provided applicable information and

guidelines throughout the entire process.

____________________ ____________________ ____________________

Emma Andrén Hilma Krantz Ivar Stiernspetz

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Bachelor Thesis in Business Administration

Title: Satisfy without Sacrifice

Authors: Emma Andrén, Hilma Krantz & Ivar Stiernspetz Tutor: Oskar Eng

Date: May 2020

Key Terms: Corporate Social Responsibility, Strategic CSR, Increased awareness,

Scepticism, Sustainability, CSR food industry.

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Abstract

Background: The increased awareness of Corporate social responsibility (CSR) among

customers and consumers demand companies to implement strategies to fulfil requirements and expectations. The Swedish food industry accounts for approximately 20-25% of the country’s environmental impact, and when the accessibility of such information increases, relevant CSR actions are regularly considered by companies involved.

Problem: The expanded consciousness of CSR in society has led to questions regarding the

purpose of corporations´ initatives. Skepticism among customers and consumers can arise towards a corporation if a CSR initiative seems to solely fulfil a financial self-interest instead of also satisfying a societal need. There is a problematic situation in how corporations within the food industry determine CSR strategies to deal with increased awareness while creating financial value.

Purpose: The study aims to investigate how corporations within the Swedish food industry

implement CSR strategies and how they are affected by the increased awareness of customers and consumers.

Method: A qualitative study with three semi-structured interviews with representatives from

the Swedish food industry were conducted. The findings from the interviews were analysed and compared with the collected literature.

Results: The study indicates that customers and consumers´ increased awareness of

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behaviour among the customers and consumers. While the study agrees with the literature regarding the benefits of using a proactive approach, it also shows the importance of considering fit by having a clear link between CSR initiatives and core business.

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List of Tables

Table 1 - Eligibility criteria ... 18

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1. Introduction

––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– In this section, the background and problem statement in the field of study will be presented. Further, an explanation of the purpose of this study and the research question will be

provided and for what reasons it will be of interest to investigate further in this topic.

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1.1 Background

Corporate social responsibility (CSR) is nothing new nowadays. The focus is on how the corporation values and uses CSR in their business. The increased awareness of CSR from consumers, investors and other stakeholders do not just demand corporations to operate within CSR but clearly present what they contribute with and how it is made (Skarmeas & Leonidou, 2013). The concept of CSR is corporation’s responsibility within the three areas of social, environmental and economic (Zhang, Morse, & Kambhampati, 2017). The areas social, environmental and economic are broad and cover several different aspects, and therefore CSR could be defined in different ways. Furthermore, the meaning of CSR varies depending on the location and industry in which the company operates, but also, it can be dependent on the interest of the stakeholder (Sheehy, 2015). The European Commission (2019), defines CSR as “the responsibility of enterprises for their impacts on society”. Further, according to the European Commission, in order to fully meet their social

responsibility the corporations should “integrate social, environmental, ethical, human rights

and consumer concerns into their business operations and core strategy in close

collaboration with their stakeholders, with the aim of maximising the creation of shared value for their owners/shareholders and civil society at large and identifying, preventing and mitigating possible adverse impacts” (p.3).

Scholars have different views of the concept CSR and to what extent the corporation has responsibility (Carroll, 1999). Friedman (1963) highlights that corporations only need to consider profit-making in order to be socially responsible for their stakeholders. Meanwhile, some point out that CSR includes responsible actions towards society to a more significant extent that consider an area outside of their stakeholders (Swanson, 1995). In contrast, Porter and Kramer (2011), highlights that CSR should not be seen as a cost. Instead, they argue that corporations should see costs for CSR as a long-term investment, in other words, finances

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that benefit the society also increase financial growth which Porter and Kramer describe as Creating shared value (CSV).

However, the boundaries of corporations’ social responsibility are diffuse, and there is a lack of research of how corporations should act since expectations vary between different

stakeholders in different businesses (Idowu & Louche, 2011). The stakeholders are important to take into consideration regarding CSR, and a trusted brand among the stakeholders is essential for a corporation to succeed and be profitable (Chandler, 2017). Further, the awareness and interest for corporations’ CSR initiatives are increasing, and the stakeholders pressure the corporations to implement social initiatives that contribute to society (Skarmeas & Leonidou, 2013; Elving, 2013). The increased awareness and knowledge lead to the risk of skepticism to arise among the consumers. Skepticism implies that the consumers doubt and question the reason and purpose of the CSR actions taken by the corporation (Skarmeas & Leonidou, 2013). Research shows that consumers can be ready to reward corporations that engage in CSR activities that seem sincere, while also punishing the ones that seem insincere and irrelevant (Becker-Olsen, Cudmore & Hill, 2006; Skarmeas & Leonidou, 2013; Elving, 2013).

One sector that has been highlighted within the topic of CSR and environmental issues is the food industry (Maloni & Brown, 2006; Yeonsoo, 2017). In Sweden, the food industry accounts for approximately 20-25% of the total environmental impact (Naturvårdsverket, 2020). The food industry is the third-largest industry in Sweden, and its revenue was estimated to 195 billion SEK in 2018, and it accounts for about 24% of the country’s Gross domestic product (GDP) (Livsmedelsföretagen, n.d.). As stakeholders gather more

information about the negative impact from the food industry on the environment, this has resulted in higher pressure on the whole industry to take responsible actions regarding the environmental concerns (Yeonsoo, 2017). Companies within the food industry need to act towards these concerns and demands by taking relevant CSR actions. Otherwise, they might face problems in terms of reputational and financial risks (Maloni & Brown, 2006).

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1.2 Problem

In recent decades, it has become essential for corporations to integrate CSR into their

businesses (Zhang, et al., 2017). As more companies have started to engage in these types of questions, awareness among stakeholders has grown. The increased awareness and

knowledge have resulted in a more significant extent of skepticism from consumers toward companies’ CSR strategies. Therefore, companies have been questioned about the motives for implementing these strategies. The reason for skepticism derives from whether the purpose is to create a positive image about the company with the intention to increase its revenues, or if it is a responsible and genuine action (Skarmeas & Leonidou, 2013; Elving, 2013).

Quantitative research made in the food industry has shown a positive relationship between CSR initiatives and both profitability and brand image. Further, the increased skepticism pressure corporations to implement CSR strategies that are both efficient and genuine (Yeonsoo, 2017). The extension of this positive relationship can depend on the industry and the specific initiative. Thereby it is crucial for companies to implement an appropriate strategy for their business (Yoon, Gürhan-Canli & Schwarz, 2006).

The food industry is likely affected by the increased skepticism of CSR operations since the knowledge about the food sector’s environmental impact constantly broadens. Thereby, the stakeholder’s environmental consciousness demand companies to act and adapt according to these concerns (Yeonsoo, 2017). However, when companies invest in CSR strategies, they might take a risk, since the outcome is uncertain regarding how the consumers will respond (Mohr & Webb, 2005).

Two approaches considered when implementing CSR strategies are proactive and passive. A passive approach refers to follow legal requirements without going beyond these and a

proactive approach refers to doing more than what is required (Yeonsoo, 2017). In order for a company to be able to develop and implement an appropriate sustainability strategy within the company, they have to consider what kind of initiative that is the most suitable for the company. For corporations to be able to develop a sustainable strategy strategically, the importance regarding the degree of fit between a company’s sustainability strategy and the company itself has been highlighted (Baumgartner, 2014). However, many corporations find

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it challenging to decide the amount of resources and effort to invest in CSR due to the uncertainty regarding how much the initiative will return financially (Yeonsoo, 2017). Hence, there is a problematic situation regarding how corporations within the food industry determine CSR strategies to deal with increased awareness while creating financial value.

1.3 Purpose

The purpose of this study is to explore how corporations within the Swedish food industry strategically implement CSR initiatives and how they are affected by the increased awareness among customers and consumers.Firstly, the research aims to investigate what kind of strategies corporations use and how they motivate these strategies. Secondly, the aim is to investigate how those strategies are valuable for the corporation and society. Further on, the relevance of this paper will be highlighted through the ongoing debate about CSR.

This leads to the following research question:

RQ: How does the increased awareness among customers and consumers affect corporations´ strategic CSR?

1.4 Delimitations and Definitions

The concept of CSR is complex and challenging to define. To be able to analyse how the corporations within the Swedish food industry strategically implement their CSR strategies, the authors have chosen to refer to the European Commission’s definition of CSR. The European Commission (2019), defines CSR as “the responsibility of enterprises for their

impacts on society”. In order to fully meet their social responsibility the corporations should

“integrate social, environmental, ethical, human rights and consumer concerns into their

business operations and core strategy in close collaboration with their stakeholders, with the aim of maximising the creation of shared value for their shareholders and civil society at large and identifying, preventing and mitigating possible adverse impacts” (p.3). Since

Sweden is a member of the European Union, the definition of the European Commission was considered appropriate to apply (European Union, n.d.). Also, the definition contains aspects that are consistent with what is being explored in this paper. The reason for applying one version of the concept CSR was to have a consistent definition and create comprehension for the readers when referring to CSR throughout the study.

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Moreover, it was found necessary to narrow down the stakeholder concept as it comprises several different parties. This in order to be able to analyse how corporations implement their CSR strategies concerning their stakeholders. The stakeholders emphasized in the research are customers and consumers since it was considered appropriate to the field of study after examining the existing literature within the chosen industry. When referring to consumer and customers, this will be stated. In cases when referring to all stakeholders and not any specific, the term stakeholder will be used.

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2. Frame of Reference

––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– After explaining the method of the literature collection, the debate on how the existing

literature defines CSR will be introduced. This will be used to create a broad comprehension of the research subject and to analyse corporations view of CSR. In the second section, the topic is narrowed down by providing the literature views on the stakeholder perspective. Also, the focus will be on the consumers and customers perspective and how they affect and are affected by corporations’ CSR. Lastly, the frame of reference includes the views of how CSR can be treated strategically.

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2.1 Method of literature collection

After choosing the topic of CSR, the authors decided to get a more profound comprehension by examining existing research. The first step in the collection process included scanning abstracts and relevant books from the Jönköping University Library. When the authors had a significant comprehension of the topic, it was narrowed down and the process of collecting relevant literature continued by using specific keywords. The keywords used were;

Corporate Social Responsibility, Strategic CSR, Increased awareness, Scepticism,

Sustainability, CSR food industry. To collect relevant journals and peer-reviewed articles, the

databases Primo and Scopus were used, together with the Jönköping University Library. To filter the articles and to generate a frame of reference of high quality, the authors utilized criteria regarding the number of citations and the credibility of journals. Also, elements such as if the literature found were supported by other research, and if the context was applicable to the study were taken into consideration (Saunders, Lewis & Thornhill, 2012).

To determine the credibility of the journals, the authors used Academic Journal Guide by

Chartered ABS. The authors aimed at using journals graded three or higher, yet in the few

cases when journals with a lower grade were used, the criteria were that the article had a significant number of citations or was supported by other research.

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2.2 Corporate social responsibility (CSR)

2.2.1 CSR – A constant debate

Evidence and indications that CSR existed a hundred years ago can be made. Further, academic writing and research relating to CSR are more accessible from the 20th century (Carroll, 1999), whereby this research find it appropriate, to begin with the 1950s. According to Carroll, Howard R. Bowen was the founder of CSR as Bowen introduced the concept of Social Responsibility (SR) in 1953. SR was aimed toward the powerful businessmen and pointed out that they were obligated to follow the values that the society stands for. The corporations were not as dominant as in today’s business world, whereby SR had not become CSR (Carroll, 1999).

In the early 1970s, new forms of CSR were introduced, whereby Carroll refers to Harold Johnson´s research from 1971. One of Johnson’s (1971) main point is that corporations can improve financially through forming social programs which, from a long-term perspective, will increase profitability for companies. During the 1980s and 1990s, several new views were brought into the CSR discussion, but those views were primarily based upon the findings from 1970s. The new views involved further research regarding CSR and its relationship to profitability (Carroll, 1999).

Porter and Kramer (2006) argue how corporations and society must be integrated instead of working as separate players. Corporations need a healthy external environment for successful internal performance, whereby, the corporations should focus on a broader perspective than short-term profits. Business managers must comprehend that strategic external CSR

investments outside its value chain can be integrated into the long-term perspective, whereby the corporation can use this as a competitive advantage. Hence, CSR is much more than a cost, instead “it can be a source of opportunity, innovation, and competitive advantage” p.80. If CSR is seen as an investment and innovation, it can contribute to more efficient use of resources which can reduce the environmental impact, but also, be cost-efficient.

2.2.2 Creating shared value (CSV) – A view of CSR

CSR, the concept that has been discussed and used over 200 years is defined in different ways by different people with blurred boundaries, conflicting objections and uncertain correlation with profitability (Idowu & Louche, 2011). Hence, two questions can be asked;

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where should boundaries for the corporations' responsibility be drawn and how can this complex concept lead to financial improvements?

Porter and Kramer (2011), argue how shared value can be created through strategic CSR operations if businesses and society collaborate. The recent years of diminishing trust in businesses have caused political leaders to implement sanctions and policies that burden competitiveness and economic growth. Further, according to Porter and Kramer, it is the corporations themselves who have created the issue, this by focusing on short-term value growth instead of focusing on the long-term perspective. Instead, companies must manage to bring business and society together, whereby both parts need to work in the same direction.

The CSV model involves creating financial value for corporations in an approach that also creates value for society. The concept invented follows the idea that long-term success for corporations starts with fulfilling societal needs around the business. This will not just satisfy the demand for the corporation's product but will also satisfy the existence of necessary assets, provide job opportunities and increased competitiveness. Hence, economic value can be created by creating societal value simultaneously, and it can be done in three ways; by reconceiving products and markets, redefining productivity in the value chain, and building supportive industry clusters at the company's locations. Reconceiving products and markets imply that the corporation must satisfy the societal needs in terms of housing improvements, enhanced nutrition and improved financial security. The model argues that products which are beneficial for the citizens will contribute to social value. Redefining productivity in the value chain refers to among other things; improvements of use of natural resources, excessive packaging, and diminishing of pollution. In other words, efficiencies that benefit the

surroundings of the business which are simultaneously cost-efficient for the corporation. Enabling local clustering focus on supportive businesses cluster and a well-organized infrastructure around the business. Business clusters enable businesses to share innovation and drive competition, while infrastructure improves shipment and transportation. Also, enabling local clustering involves supporting and encourage academic institutions such as schools, universities and research centers. To conclude, CSV comes into existence when corporations broaden their perspectives outside their core businesses (Porter & Kramer, 2011).

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At the same time, the CSV model is criticized for being remarkably opportunistic and that Porter and Kramer's model simplifies complex world economic issues. CSV challenges the fact behind microeconomics and the area of comparative advantage where each unit should focus on where it has an advantage. Further, if corporations spend resources outside the core business, this burdens the financial performance (Crane, Palazzo, Spence & Matten, 2014). Also, research argue that corporations should meet the demand from its stakeholders regarding CSR with an equivalent amount of CSR supply, this for a corporation to avoid unnecessary CSR cost (McWilliams & Siegel, 2001).

2.3 CSR from the stakeholders’ perspective

The stakeholders’ opinions and interests are essential aspects for the firm to take into consideration regarding CSR (Chandler, 2017; McWilliams & Siegel, 2001). Chandler (2017), emphasizes how the empowered stakeholders are reshaping the business environment and the change is driven by five main trends; affluence, sustainability, globalization,

communication and brands. Affluence refers to how the stakeholders in more highly developed countries have higher societal expectations overall and therefore have higher demand toward the companies. Sustainability deals with the increased concern for the environment due to extreme weather occurrence and other concerns regarding the climate. Globalization is a third driving force in CSR, and it refers to how the increased globalization leads to a larger extent of stakeholder concerns due to corporations’ operations abroad. Communication is a driving force in terms of new technologies that enable information and news to be spread extremely quickly. These four drives together lead to the fifth, brands, which is an essential part of a corporation’s success. A corporation’s reputation is more important than ever, and a trusted brand with respect to all stakeholders is essential to succeed and be profitable (Chandler, 2017).

Further, stakeholder is a broad term, and it can range from among others; customers, consumers, employees, suppliers and shareholders. Chandler (2017), points out the

consumers and customers as economic stakeholders of the firms and further describes them as a primary group in terms of being the group the corporation delivers its products to and also by which it connects to society. Likewise, McWilliams and Siegel (2001), divide stakeholders into two separate groups to simplify the demand for CSR from the stakeholder perspective; the demand from consumers, and the demand from other stakeholders (investors,

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employees, and community).

2.3.1 Consumer reactions

As more companies engage in the topic of CSR, the awareness among consumers has increased and there is no alternative to not engage in CSR related questions (Skarmeas & Leonidou, 2013). However, the knowledge regarding the effects of the initiative on the consumers’ responses is limited (Bhattacharya & Sen, 2001). It is somewhat unclear whether the response from consumers will be positive and benefit the corporation or instead negative and hurt them (Becker-Olsen et al., 2006). Quantitative research that has been done suggests that greater use of CSR has a positive effect on consumer attitudes and purchasing decisions. It further explains how the reputation of a corporation is an important aspect in the evaluation of a company and that the CSR is a part of that (Bhattacharya & Sen, 2001; Mohr and Webb, 2005). Chandler (2017) supports this and argues that stakeholders and therefore, also

consumers today have the responsibility to both punish and reward the corporations for their actions. To reward the firms, the consumers should purchase products and services from corporations that respond to and exceed their expectations. To punish the firms, the

consumers should avoid supporting the corporations that does not live up to the expectations (Chandler, 2017). However, there is also research suggesting that the area is more complex than previously stated. It shows how consumers consider CSR important, but that it does not always play a role in the actual purchasing decision (Bhattacharya & Sen, 2004; Öberseder, Schlegelmilch & Gruber, 2011). Although the consumers are more aware of the importance of CSR, statistics show that consumers are not always ready to pay a higher price if needed (Bhattacharya & Sen, 2004).

One result of the increased awareness is that the consumers’ responses tend to be more doubtful and skepticism among the consumers has started to arise. Skepticism refers to mistrust, doubt, and in this case, questions regarding the motives of the corporations CSR actions (Skarmeas & Leonidou, 2013; Elving, 2013). Instead of blindly accepting the responsible actions taken by the corporations, consumers could consider these actions to be implemented out of self-interest (Becker-Olsen et al., 2006; Elving, 2013). As a result of skepticism, consumers tend to study information more attentively and questioning the actions of the companies (Connors, Anderson-MacDonald & Thomson, 2017). Furthermore, the skepticism could lead to a bad reputation of the corporation and in that way hurt them in a

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negative way (Forehand & Grier, 2003). Skepticism among consumers could also occur when there is a lack of motives for the corporations´ CSR initiatives which in turns could lead to companies being accused of using a window-dressing strategy (Elving, 2013). A reason to why window-dressing phenomenon occurs might be due to the fact that some companies are using CSR as a way to darken other problems they might face (Connors et al., 2017). The reactions from the consumers can depend on how the corporations act strategically with regards to CSR (Yeonsoo, 2017; Connors et al., 2017). To prevent skepticism from arising, corporations should act consistently towards their CSR strategies (Connors et al., 2017).

2.4 Strategic CSR

For CSR to be strategic, it needs to be beneficial for the company’s core operation, thereby not only a helpful initiative for society. By developing CSR and using different strategies, the activities can simultaneously serve both financial gain and societal benefit (Burke &

Logsdon, 1996).

McWilliams and Siegel (2001) argue for corporations to use a supply and demand framework to satisfy both financial result and society. First, it is of importance to understand the

demand. There are two different demands for CSR; the demand from consumers and the demand from other stakeholders (investors, employees, and community). The demand for consumers regards the support of social issues. By supporting social issues, consumers feel that the product or service satisfies the consumer’s personal interest regarding social issues whereby this can lead to financial improvements for the corporation. The demand for CSR from other stakeholder includes, for example, labour relation policies, a safe workplace and financial security.

However, to meet consumer demand, corporations can reply with an equal supply of CSR to optimize financial performance. McWilliams and Siegel (2001) suggest corporations can use a differentiation strategy to satisfy the demand from consumers. A differentiation strategy can be explained as a strategy where the corporation generates new demand for an existing

product by adding various means to differentiate from competitors. Those means can be CSR initiatives such as, for example, a corporation transforming its product to be entirely organic is a differentiation strategy where the consumer can satisfy a personal interest while

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purchasing. Also, by a successful differentiation strategy where combining the product with CSR, a premium price can eventually be applied (McWilliams & Siegel, 2001).

2.4.1 Proactive and Passive CSR

For corporations to develop successful strategic CSR, aspects such as financial growth for the corporation itself together with satisfying societal needs, have to be considered. Further, it is of importance to create a common understanding of the CSR work within the corporation and find a balance in meeting the different stakeholders´ demands (Baumgartner, 2014).

Findings from Yeonsoo (2017) shows how consumers´ responses to CSR in the food industry can generate different outcomes depending on if the initiatives are passive or proactive. One of the first decisions when planning corporate sustainability strategies is to decide whether to have a passive and reactive or proactive and active strategy which sets the basic strategic orientation of the CSR work (Baumgartner, 2014). Yeonsoo (2017) refers to passive CSR as corporations that practice the least possible effort by strictly following laws and regulations. Proactive CSR refers to if corporations voluntarily involve in activities that exceed laws and regulations and focus on sustainability in the long-run in order to contribute to a more sustainable society (Yeonsoo, 2017). Moreover, proactive strategies are preferred and often used if sustainability is part of the normative level of the corporation, meaning the basic philosophy and values of the corporation (Baumgartner, 2014). The results from Yeonsoo (2017) shows that proactive strategic CSR tends to generate more positive consumer responses than if engaging in passive CSR. Further, proactive CSR tends to influence purchase intentions and contribute to a positive overall image of the corporation (Yeonsoo, 2017).

However, consumers’ observation of CSR initiatives differs among industries, for example, as observed in the food industry (Yeonsoo, 2017) and the manufacturing industry (Torugsa, O’Donohu & Hecker, 2012) proactive CSR tends to correlate with financial performance. Meanwhile, in the information and technology industry, CSR has a limited affection in product evaluations among consumers (Yeonsoo, 2017). Further, if corporations must increase their prices to cover the expenses of CSR initiatives, a proactive CSR approach can be a drawback financially if the consumers are not willing to respond to the price adjustment. Hence, when companies invest in CSR strategies, they might take a risk, since they do not

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know what the outcome will be. Therefore, some companies find it challenging to decide on what extent to invest in these kinds of CSR initiatives (Mohr & Webb, 2005). In turn, some companies find it more secure to practice a passive approach (Yeonsoo, 2017) when there is a lack of evidence of a CSR strategy to be successful(Martin, 2002). Companies that apply a proactive CSR strategy value sustainability in the long-run and deals actively with different stakeholders´ expectations even if it is at the cost of their profitability. Even though evidence has shown that proactive CSR strategies contribute with positive benefits for the companies, stakeholders’ response to proactive and passive CSR initiative varies. Thereby it is of

importance for business managers to comprehend consumers’ attitude towards the CSR work when evaluating passive or proactive CSR actions (Yeonsoo, 2017).

2.4.2 Influence of Fit

A successful sustainable strategy requires a relevant motive between the strategy and the core business, objectives and mission of the company (Burke & Logsdon, 1996). There are

different types of CSR strategies which companies can practise, and in general, most

companies choose to focus on some specific initiatives (Elving, 2013). For corporations to be able to strategically develop a sustainable strategy, Baumgartner (2014) highlights the

importance of relevance between a company’s sustainability strategy and the company itself. In other words, corporations can either use a strategy that is unrelated or directly related to the company’s main activity, which could be described as fit (Elving, 2013). Further, fit could be described as the association between a company’s initiatives and its image, output, market position and target customer group. Moreover, fit might occur when there is a relationship between a company’s core business and social actions (Becker-Olsen, et al., 2006).

According to scholars, the degree of fit can affect how consumers view corporations´ strategic CSR (Becker-Olsen et al., 2006; Ellen, Webb & Mohr, 2006; Elving, 2013). The degree of fit between the company and its CSR initiatives is related to consumer skepticism towards the company (Elving, 2013). High fit tends to reduce the level of skepticism towards companies’ motives, and low fit tends to have a negative effect on the consumer’s attitude towards the company since it increases the level of suspicion among consumers (Ellen, Webb & Mohr, 2006). This means, when companies practice CSR initiatives which could be seen as suitable for their business, referred as high fit, the level of skepticism among stakeholders

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tends to be low, and therefore, consumers are more likely to have a positive attitude towards the company. However, when companies practice CSR initiatives which could be seen as less appropriate, referred as low fit, consumers tend to respond more skeptically, and this could hurt the company’s reputation (Elving, 2013). Further, the presence of fit is more likely compared to the absence of fit, since the lower level of fit causes consumers having a skeptical attitude towards the company but also being critical against their motives (Becker-Olsen et al., 2006).

2.4.3 The Swedish food industry

As mentioned, the Swedish food industry is the third-largest industry in Sweden and accounts for about one-fourth of the Swedish GDP. Further, it is around 4 600 companies in the

Swedish food industry where they together generate a turnover of approximately 195 billion SEK. Also, the industry can be divided into fifty sub-industries whereby the meat-and

charcuterie, dairy and bakery industries are dominant and together illustrate 50% of the sector (Livsmedelsföretagen, n.d.). Sweden imports twice as much food as it exports, whereby the significant parts of the imports include products that Sweden does not produce, such as citrus fruits, bananas and coffee beans. However, some imports are in direct competition with the Swedish production. Those imports are mainly meat, vegetables and dairy products

(Jordbruksverket, 2018).

Sustainability is a significant concern within the sector and the trade organization

Livsmedelsföretagen (2019), has five commitments the industry strives to achieve; fossil-free industry by the year of 2030, reduce the food waste by 50%, 100% recyclable packaging material in the year 2030, fair trading conditions, and more efficient use of water resources. The goal for a fossil-free industry in 2030 has the purpose of reducing the current global temperature increase, this by deleting the carbon dioxide emissions. Further, the food waste illustrates 30% of the total food production and the Swedish food industry strives to reduce this to 12.3%, which is in accordance with the United Nations goal. The goals for recyclable packaging and efficient use of water resource refers to the excessive of material use per capita in Sweden that the industry strives to reduce. However, the goals work along with the Paris Agreement and United Nations target for sustainable development.

(Livsmedelsföretagen, 2019). Further, there is evidence that the Swedish food industry is focusing on sustainable development, according to the organization Lantbrukarnas

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Riksförbund (2018), has Swedish milk production 44% lower climate impact than the international average and the production of beef in the meat industry has 70% lower climate impact than the global average.

However, the Swedish food industry has challenges. The growing population increase demand, at the same time, decrease the cultivation areas which burden the supply side. Also, large corporations that have parts of their production outside Europe have requirements to enhance social development in those countries as well. Lastly, enhanced nutrition within the food industry is needed for a healthier society. Research and innovation are crucial elements to counter the challenges of; climate change, public health, and food supply. An increase of resources within research and innovation strengthens the industry in the long-term and contributes to both a healthier society and financial growth (Livsmedelsföretagen, 2019).

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3. Methodology and Method

––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– In this section, the selected method will be presented and described. The first part describes the methodology with explanations regarding research philosophy, research approach and research strategy. The second part describes how the data was collected and thereafter, how the data was analysed. Lastly, the ethics and quality of research will be reviewed.

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3.1 Methodology

3.1.1 Research philosophy

The research philosophy is a central part of conducting research since it establishes a ground for how the research will be carried out (Saunders et. al., 2012). According to Collis and Hussey (2014), there are two main research paradigms, positivism and interpretivism. The first paradigm, positivism, originates in natural science, and it assumes that social reality cannot be affected by the investigating process. Positivism is mostly characterized by quantitative research methods since it rests on the assumption that social phenomena can be measured (Collis & Hussey, 2014). Since this study does not intend to be a quantitative investigation, it becomes evident that the thesis authors distance themselves from a positivistic paradigm.

Interpretivism, on the other hand, assumes that social reality is subjective and therefore affected by the authors´ perceptions. The focus in this paradigm is to gain an interpretive understanding and therefore, qualitative research approaches are the most commonly used (Collis & Hussey, 2014). To be able to generate relevant findings to the research purpose, interpretivism will be applied in this research in order to get a deeper understanding of the phenomena. The observations and findings are predicted to be heterogeneous and subjective, which are in line with how the interpretivism highlights the differences between humans as social actors (Saunders et al., 2012).

3.1.2 Research approach

There are two main approaches in which the research theory can be built and tested, and these are deductive and inductive (Saunders et al., 2012). Deductive research refers to a study in which empirical observations are tested based on a developed structure of theory and

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research could be described as moving to the particular from the general, and it is often used in quantitative research when hypotheses are formulated (Collis & Hussey, 2014). The inductive approach refers to when conclusions are based on what has been observed, and it can be explained as generalizing the empirical findings and apply to a broader purpose (Collis & Hussey, 2014; Mantere & Ketokivi, 2013). The inductive approach can, for example, involve research questions instead of hypothesizes and therefore this is the appropriate research approach to follow within the study. It will allow us to explore and determine new relations and patterns within the field of study and thereby contribute to existing studies and theory.

3.1.3 Research strategy

The research strategy act as a guideline to reach the objective of the study, in other words, clarify the issues that are investigated by answering the research questions (Saunders et al., 2012). The strategy chosen will be to conduct a qualitative study with semi-structured interviews. Due to the setup of the semi-structured interviews, the data can be compared, whereby the research question can be answered. This strategy is appropriate since it exists sufficient knowledge in the topic of CSR, but subjective knowledge is inadequate (McIntosh & Morse, 2015). By interviewing large corporations within the Swedish food industry with significant market positions, it will give the research a realistic view on how corporations use CSR strategies in their core operation.

3.2 Method

3.2.1 Data collection

The primary data collected will be presented under empirical findings. In line with the inductive approach of the thesis, the authors aim to explore the field of study by conducting semi-structured interviews with participants from the sampled companies. By using this specific method to collect primary data, it was made possible to answer the research question by generating a heterogeneous and deep understanding of the problem (Collis & Hussey, 2014). Further, it was appropriate with a semi-structured approach since it is characterized by flexibility (Edwards & Holland, 2013). In order to capture all information of importance, audio recording was used during the interviews (Saunders, Lewis & Thornhill, 2016).

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3.2.2 Sampling method

A purposeful sampling method is used in qualitative research when the authors choose individuals or organizations because they have knowledge in the topic. Hence, the selected individual can thereby understand the research problem and contribute to the paper (Creswell, 2007). By choosing the purposeful sampling method, the interviews contributed with

trustworthy information to satisfy the purpose of the research.

A list of eligibility criteria was constructed and followed in order to select appropriate

corporations for the study. These criteria can be found in the table below. Due to the COVID-19 virus, it was more complicated than expected to follow all the criteria planned. The COVID-19 virus caused a pandemic in the world which led to that some of the companies contacted had unexpected things to handle (Folkhälsomyndigheten, 2020). However, three of the corporations contacted had the opportunity to contribute to the research with relevance, credibility and valuable knowledge. These corporations are included in the table.

Table 1 - Eligibility criteria

Interview Interview 1 Interview 2 Interview 3

Company Nestlé Sverige AB HKScan Sweden AB Scandi Standard AB Operation in the food

industry Yes Yes Yes

Have operations in

Sweden Yes Yes Yes

Founded in Sweden No Yes Yes

Works actively with

CSR Yes Yes Yes

Further, the following section includes a summary of selected corporations. The first corporation interviewed is Nestlé which is the world’s largest food and beverage company with around 2 000 brands and operates in 191 countries worldwide. The corporation was founded in 1866 by Henri Nestlé in Switzerland and had in 2019 more than 352 000

employees (Nestlé, n.d.-a). Nestlé Sweden AB has many well-known brands with significant market positions where Zoegas, Nescafé, Nespresso, Kit Kat, Smarties Cheerios and Hälsans Kök are the most acknowledged (Nestlé, n.d.-b).

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The second corporation selected is HKScan Sweden AB which operates in the Swedish meat and charcuterie industry with the brands Scan and Pärsons. HKScan Sweden AB is owned by the Finish corporation group HKScan which operates in the Nordic region and the Baltics. In total, the corporate group has 7 000 employees, where HKScan Sweden has around 1 700 employees (HKScan, n.d.).

The last corporation selected is Scandi Standard AB which is a group consisting of five brands that operate in the Nordic Region and Ireland. The group operates in the Swedish food industry and sells chicken-based products through the company Kronfågel AB. Scandi

Standard AB has around 3 000 employees, and Kronfågel AB has around 800 employees (Scandi Standard, n.d.).

3.2.3 Interview design

As mentioned, semi-structured interviews were conducted in order to get a comprehensive understanding of the phenomena without losing focus on the most important concepts (Collis & Hussey, 2014). This strategy was considered the most appropriate since it is suitable when conducting qualitative research and collecting data based on the chosen sampling method (McIntosh & Morse, 2015). By using this approach, the interviewers were able to guide the respondents through themes consisting of specific questions, without risking important aspects to be missed out.

The interview questions are stated in Appendix A and Appendix B and they mostly consist of open-ended questions, yet some probing questions. The open-ended questions allowed the respondent to describe a concept or situation in a detailed way. These questions resulted in well-developed answers with much information. The probing questions were used in order to understand and explore some specific situations or concepts further (Saunders et al., 2016). In order to develop relevant questions, significant research about the field of study was made before constructing and conducting the interviews.

The interviews were divided into three main parts where the first part consisted of general questions about the participant’s background in order to get to know the participants more and make them feel comfortable and able to express their thoughts freely. The second part concerned questions regarding strategic CSR and started broad before narrowing the

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questions down to be more specific. In the third and last section, the questions concerned stakeholders and more specific, the customers and consumers. The interview questions contributed with broad knowledge and valuable insights that later formed the basis of the analysis. In order to be prepared and better comprehend the interviews, the authors examined the corporations’ websites and sustainability reports.

The interviews were planned to be held face-to-face since this is the preferred method when conducting semi-structured interviews. By meeting in person, the interviewers can establish trust more easily and also notice body language and expressions (Easterby-Smith, Thorpe & Jackson, 2015). However, due to the COVID-19 virus and the travelling restrictions, the interviews were held over the phone (Folkhälsomyndigheten, 2020). After all, the interviewers felt comfortable with this method, and it created the advantage for the participants to be more flexible with the time of day for an interview. Further, the

interviewers adapted to the circumstances by being well prepared and test their equipment before calling the participant (Saunders et al., 2016).

All the participants had, as the interviewers, Swedish as their native language and therefore the interviews were conducted in Swedish as it was the most preferred language by all the persons involved. Further, it was done in order to avoid language barriers. To create an overview of the participants and interviews, a table is presented below.

Table 2 - Interview design

Interview Interview 1 Interview 2 Interview2

Company Nestlé Sverige AB HKScan Sweden AB Scandi Standard AB Role of person

interviewed Communication manager Communication manager Sustainability manager

Type of interview Phone Phone Phone

Years of employment 5 1.5 3

Duration of interview 48 minutes 47 minutes 51 minutes

3.2.4 Data analysis

It is of importance to prepare the data for analysis and make sure not to lose any important data. This was accomplished by directly transcribing the recorded material (Saunders et al., 2016). However, in order to analyse the data, the authors chose to follow a thematic analysis

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approach. Braun and Clarke (2006) suggest using this approach for qualitative studies to simplify the complex and broad information gathered.

The analysis process can be divided into six steps which the authors decided to follow. Firstly, it was of importance to understand and examine the collected and in this case, recorded data. This was done by listening to the recorded material and creating transcripts which were also translated to English. The second step was to integrate the data and start the initial coding. The authors labelled the information that was considered to be of importance and arranged the data in a methodical manner. In step three, the key themes were identified, and the themes were given different colours in order to structure the data further. In the fourth step, the themes were reviewed, and it was of importance to make sure that the chosen

information was relevant to answer the research question. The review led to some of the themes being separated and some being joined together. Step five included connecting the themes to the frame of reference and starting to create headings to be used for the different themes. Lastly, the sixth step was done by presenting the findings in a meaningful and logical manner. This included implementing quotes and critical information under the empirical findings. Furthermore, an analysis was made to compare the findings with the frame of reference in order to verify conclusions (Braun & Clarke, 2006).

3.3 Ethics and quality of research

Research ethics refers to how the researchers conduct the research and act towards the participants in the study. Ethics is important to take into consideration from the beginning of the study, and it is especially a concern when the research is based on data collected from human beings. It was of importance for the authors to clearly define the purpose and research question of the thesis when sending the interview requests. In the initial email formulated to the companies, this was clearly described in order for the participants to understand what kind of study they accepted to participate in. Further, confidentiality was assured by not sharing the raw data with anyone outside the thesis group and keeping the material stored in password-protected devices. Anonymity for the individuals’ participants was agreed on by not providing names (Saunders et al., 2016).

Furthermore, it is of importance to ensure that the research has high quality from the start. In order to decide the quality of research, four criteria may be used, and these are;

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dependability, credibility, transferability and confirmability (Saunders et al., 2012). It was important for the authors to consider these criteria from the beginning of the study to create trustworthy research.

3.3.1 Dependability

When using semi-structured interviews, the data can be collected during different times and under different circumstances, which can lead to lack of dependability (Saunders et al., 2016). Thereby, in the research, the data can be affected by circumstances that the

interviewers had in mind during the interviews. Increased dependability can be achieved if the research process is organized in a methodical manner, which, for example, mean carefully documented during the whole process (Collis & Hussey, 2014). To avoid lack of

dependability, the interviews were recorded and transcribed directly afterwards. Also, the interviewers met at the same place for each interview and had the same procedure to ensure dependability.

3.3.2 Credibility

To achieve high credibility, it is of importance that the questions in a semi-structured interview are open-ended, asked in the same order and also that the responses are analysed from different views. Also, credibility can be accomplished by considering and conducting opposing cases, in other words, cases that counter a theory, for example. Further, to

strengthen the credibility, it is of importance that the participants understand both the purpose and the topic of the study (Saunders et al., 2016). Also, the credibility can be enhanced if the researchers study the subject in a long period of time, this due to increased comprehension and knowledge of the subject (Collis & Hussey, 2014). For this study to achieve high credibility, the interviews conducted have been consistent where the participants been carefully selected to guarantee their knowledge in the topic. Further, cases against some theories were taking into consideration to comprehend the different views that are under debate to increase the understanding of the interviews.

3.3.3 Transferability

Transferability refers to external validity which has to do with whether the findings of the study can be applied to other situations or groups (Saunders et al., 2012). However, an important aspect is that qualitative studies like this often use small samples, and the study is,

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therefore dependent on the situation in which it was made (Shenton, 2004). To apply

transferability in the study, the researchers have put effort into clearly describing the research questions, data collection, findings and method of analysis. By doing this, other future

scholars can make a similar study about strategic CSR and the increased awareness yet applied to another context such as another industry than the food industry (Saunders et al., 2016).

3.3.4 Confirmability

Another challenge when doing a qualitative study is to keep real objectivity throughout the research due to the biases of the researchers (Shenton, 2004). In order to ensure

confirmability, it is of importance that all findings generated through interviews are in line with what the participants stated and not affected by the researchers´ views (Shenton, 2004; Collis & Hussey, 2014). As mentioned, the interview started with background questions to make the participant feel at ease and encouraged to speak their mind out and elaborate on the subject. The researchers also made sure that the participants understood the purpose of the study, which further ensured confirmability. Above this, audio recording was used during the interviews, which made it possible to quote the participants in the findings and emphasizes the objectivity. Lastly, the researchers made sure not to be affected by their biases, this by viewing theories and concepts from different angles.

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4. Empirical Findings

––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– The following section will provide the empirical findings from the data collected through the interviews. It includes the relevant information from the transcribed material strengthened with quotes from the respondents. The section is structured by following the themes in the frame of reference in order to combine relevant literature and findings in the analysis. –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

4.1 Defining CSR

CSR is a broad term that can be interpreted in different ways. All three companies

interviewed agree on this, and therefore the companies have different views regarding how they define and work with CSR.

Scandi Standard describes CSR as something integrated into their core business instead of working with it as a separate function. Each initiative in their core operations is also aimed to be responsible actions for society.

“We do not use CSR as a core concept. For us, sustainability is about what makes us a responsible and truly value-creating company today, tomorrow and the day after tomorrow” - Scandi Standard

HKScan Sweden describes CSR as a significant field that needs to be taken into consideration throughout the entire organization, starting at the group level. They have chosen to divide their CSR work into four areas which are the environment, animal care, social sustainability and economic sustainability.

“These are strategic issues that we work with at group level and to follow these is a prerequisite for our way of doing business. Our CSR work is central and extremely comprehensive throughout the corporation group” - HKScan Sweden

Nestlé expresses that they have taken a step further in their CSR and sustainability work. They define their sustainability work as Creating shared value (CSV), which is also their business model. Nestlé further explains how they sent their business model and way of working to Porter and Kramer, the founders of the CSV concept. By doing that, they got the

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acceptance to define themselves as a CSV company. They motivate their CSV work as followed:

“If a company should be able to exist in the long-term and function as a sustainable company, you should not just think about making money. Instead, you must create an added value for the community in which you operate” – Nestlé

4.2 Initiatives and implementation

The implementation and decision-making regarding the companies’ basic policies and guidelines are taken at the top instance of the three interviewed companies. This in order to ensure that they permeate the entire organization and are followed in all countries they

operate. However, the implementation and decision-making process somewhat differ between the companies.

At HKScan Sweden, the decisions are made by the board. Further, they have a group management team where there is a person responsible for CSR and sustainability issues.

“The board, together with the group management group, controls our strategic CSR work” - HKScan Sweden

Scandi Standard has an integrated decision-process between the different business areas and the highest department since they do not treat CSR as a separate field. Above this, Scandi Standard has its own framework called “The Scandi Way”, which clarifies their sustainability work and in which areas they focus. The responsible group for “The Scandi Way” consists of representatives from the top management and responsible persons both centrally and locally from various business groups. These are also involved in the decision-making of policies and guidelines regarding CSR initiatives.

“Formal policies are developed within the business area that it belongs to together with support by the sustainability department and decided at the top-level” - Scandi Standard

At Nestlé, the basic policies and guidelines for their sustainability work are determined at their headquarter in Vevey, Switzerland. The company has 36 clear goals which they treat and follow up in its sustainability report every year. Each subsidiary and country are allowed

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to introduce its own specific CSR initiatives as long as they comply with the regulations of the head office.

“The different brands have great freedom to set up their own strategies as long as they are in accordance with the rules of the head office” - Nestlé

4.3 The stakeholder importance

When implementing CSR strategies, corporations have different stakeholders to consider. The level of importance of the different stakeholders varies between the different

corporations.

HKScan Sweden and Scandi Standard have similar views of their stakeholders as they see customers and consumers as the most essential stakeholders. The companies´ customers are the grocery stores, the public sector and restaurants, which in turn sell to the consumers. Therefore, both customers and consumers are important stakeholders to consider when implementing CSR strategies.

“Unless the customers think we are doing good and thus are not interested in buying our products, we have nowhere to sell and reach out to the consumers. Thus, it is very important to have good cooperation with our customers” - HKScan Sweden

“We often talk about customers and consumers in two stages because we do not sell directly to consumers, instead, through our customers. For us, it is important that both our customers and consumers like our products and also feel comfortable in buying them.” - Scandi Standard

Furthermore, Scandi Standard describes investors, employees both existing and potential in the future, and other players within the industry as important stakeholders to consider when implementing and develop CSR.

Nestlé, on the other hand, cannot highlight the most important stakeholders since they are a global and large company. Thus, Nestlé has a number of important stakeholders that can differ between countries and contexts.

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“A company as large as Nestlé cannot just point out one group of stakeholders as the most important. But if we look at Sweden which is a well-functioning country where corruption is low, and there is a functioning business sector, I would say that consumers are the most important stakeholder in Sweden” - Nestlé

4.4 Increased demand among customers and consumers

Working with questions related to CSR is today something customers and consumers expect and demand from corporations. This is something all three interviewed companies agreed on. In order to take a share in the market, both today and in the future, it is necessary for

companies to act responsibly by contributing to a sustainable society but also meet the expectations from customers and consumers.

“Working with sustainability and CSR issues today are hygiene factors for all large companies, and if you do not, you are facing major problems. In Sweden, we have come a long way in our sustainability work, and here the expectations are also relatively tougher from both customers and consumers.” - HKScan Sweden

“Nowadays, the development of CSR is moving fast forward. More companies are involved in sustainability work, which we see as very positive” - Nestlé

Both HKScan Sweden and Scandi Standard explain that their customers work actively with CSR and sustainability, and hence, have requirements for suppliers to act equivalent.

“Our customers are very good at working with sustainability and driving the development forward, and thus their demands on us are more concrete” - HKScan Sweden

“Many of our customers have clear policies and communication strategies towards their consumers and therefore want to feel confident that we are living up to these” - Scandi Standard

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According to Nestlé, there is an increasing trend among the customers and consumers to demand more CSR from the corporations nowadays. However, they still find it difficult to determine to what extent the expectations are set.

“I feel that many consumers say and sincerely feel they want to buy goods that are sustainably produced, but then it is difficult to determine how much time consumers actually spend on finding out how sustainably produced the products are” - Nestlé

HKScan Sweden has experienced increased demand from the consumers regarding CSR work, and this is something that has become increasingly important to take into consideration both today and in the future.

“We see that the consumers’ demand is increasing and therefore, it is

important for us to inform consumers about what the industry looks like today and what the climate impact our business has” - HKScan Sweden

Scandi Standard feels that consumers place a high demand on companies regarding issues that are close to the consumers.

“We sometimes find that the demand made by consumers are primarily linked to the products. Questions and requirements that are asked are more about whether the products are healthy and safe to eat. These are issues that directly affect the consumers” - Scandi Standard

However, Scandi Standard expresses how the consumers demand has started to change and increase in terms of going beyond the requirements mentioned. For example, consumers have questions regarding the environment and climate impact.

4.5 The implications of the increased awareness

The increased awareness has, in some situations, resulted in consumers being skeptical and hence questioned the companies’ motives behind the CSR initiative, without having

sufficient knowledge.

“In recent years, there has been a huge focus on global sustainability goals and climate issues. One problem that has arisen is the spread of fake news and that people have completely wrong ideas about things. After all, I know what

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corporate responsibility Nestlé takes and how much we invest in CSR and sustainability. Therefore, I do not understand why they blame and question the companies that take their responsibility” - Nestlé

Further, Nestlé argues that there are complex challenges linked to their CSR initiatives which external parties do not have knowledge about. This can result in customers, consumers and other stakeholders being skeptical towards their business without understanding the overall picture.

“It is easy to point fingers, criticize and judge but the more you get involved in our CSR initiatives, the more you realize how complex and difficult it is” - Nestlé

Nestlé has experienced a situation where their CSR initiative was faced by criticism from the consumers. This was due to misunderstandings in the communication and the spread of fake news. According to Nestlé, the consumers' response was skeptical towards their initiative, but the company found it difficult to measure to what extent the situation affected their sales.

“It is difficult to determine how this misunderstanding affected the company from a value-creating perspective. On the other hand, we see that consumers buy our products, but it is difficult to determine if they would have bought more if this situation had not arisen. - Nestlé

Scandi Standard, on the other hand, has chosen not to actively marketing their CSR initiatives and sustainability work. However, when question arises, it is of importance for them to respond to it. This is something that is crucial for them in their communication.

“For us, it is important to have an active dialogue, be responsive and answer questions from stakeholders regarding our operations. It is also important to communicate our stories and what is important for us” - Scandi Standard

To prevent skepticism and the spread of fake news and to make customers and consumers more aware of the food industry and its climate impact, education is necessary. HKScan Sweden explains that they act responsibly by educating their customers. This is of importance since their customers also have significant market positions, and in some cases, might not be provided with sufficient knowledge about sustainability. This is something that HKScan

Satisfy without Sacrifice : A qualitative study about how the increased awareness among customers and consumers affect corporations´strategic CSR in the Swedish food industry