Social Responsibility: what’s the big deal? The influence of news media on future business people : A study on the three CSR-dimensions in media

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Social Responsibility: what’s the big deal?

The influence of news media on

future business people

A study on the three CSR-dimensions in media

Master’s thesis within Business Administration, International Marketing

Authors: Anja Deeg, Ann-Lisa Niemann

Tutor: Prof. Adele Berndt

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Acknowledgement

The authors would like to thank their tutor Prof. Adele Berndt from International Business School, Jönköping, Sweden for being approachable and for her support throughout the master thesis process at all times. Furthermore, a special thank you goes to Prof. Dr. Lucy Küng from HSG University of St. Gallen, Switzerland and International Business School, Jönköping, Sweden, who was kind enough to share her experiences in the media industry with the authors and made herself available to discuss details and answer questions via Skype. Last but not least, the authors would like to thank Prof. Dr. Dr. Mouchnik from MediaDesign University, Munich, Germany for sharing his thoughts about the three CSR-dimensions in media as well as for providing the authors with literature recommendations.

Anja Deeg & Ann-Lisa Niemann

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Master Thesis in Business Administration, International Marketing

Title: Social Responsibility: what’s the big deal?

The influence of news media on future business people A study on the three CSR-dimensions in media

Author: Anja Deeg and Ann-Lisa Niemann

Tutor: Prof. Adele Berndt

Date: 12th_{of May 2012}

Subject terms: CSR, SR, Perception, news media usage

Abstract

The current study aims to provide insight into future business people’s perception of Social Responsibility topics in news media generated in the European Union. Furthermore, the study develops an understanding of the link between the perception of future business people and the three CSR-dimensions in media. These three dimensions include ‘opinion forming’, ‘opin-ion illustrating’ and ‘responsibility for own business act‘opin-ions’, emphasizing the media’s re-sponsibility towards its stakeholders in order to act in line with socially responsible business actions. In news media, CSR is rather complex and sensitively linked to agenda setting, de-mocracy, and transparency issues as well as accountability and one-way communication. The study focuses on future business people’s perceptions based on how they are affected by a media company’s commitment to the three CSR-dimensions since opinions are formed through media within society as a whole.

Furthermore, the current study is conducted with qualitative research in order to gain deeper insight into the sample group’s in-depth feelings, experiences and opinions. Focus groups are conducted in order to achieve a thorough understanding of their perceptions. The analysis of the current study is based on thematic analysis enabling a systematic approach in order to provide the reader a clear overview. Moreover, findings are discussed and implications for management of media companies and society are demonstrated.

A number of differing opinions become evident through the study among future business people. Their perceptions towards SR topics in news media emphasize the importance of the topic in today’s business environment and society as well as a subject that needs attention in news media. Moreover, future business people share a concern regarding news media’s agen-da setting and illustrating, which in turn has an effect on the way they perceive a media com-pany’s social responsibility processes. At the same time, SR topics in news media are intend-ed to be taken into consideration for future decision-making.

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Figures

Figure 1: Link between three CSR-dimensions and perceptions of future business people ... 2!

Figure 2: Caroll’s CSR and explanation of its components ... 11!

Figure 3: Development of CSR reporting until 2011 ... 12!

Figure 4: Important components for CSR implementation of KPMG survey ... 12!

Figure 5: Three dimensions of CSR and its impact on media content users’ perceptions ... 14!

Figure 6: Branches of the media industry ... 19!

Figure 7: Development of perception of SR news topics ... 22!

Figure 8: Theory linkage.. ... 23!

Figure 9: Target population for the research of the perception of the news media industry ... 27!

Figure 10: Three stages of the thematic analysis for the focus group discussions ... 30!

Figure 11: Explanation of FIPs ... 43!

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Tables

Table 1: Transformation of SR into CSR ... 3!

Table 2: Overview of the three principles for CSR activities ... 8!

Table 3: Two prevailing positions of means of CSR in today’s business environment ... 9!

Table 4: The change of stakeholder definitions ... 15!

Table 5:Overview of different media types (categories, channels and characteristics) ... 18!

Table 6: Overview of link between research questions and CSR-dimensions ... 31!

Table 7: Confirmation for media usage ... 32!

Table 8: Sample group support ... 32!

Table 9: Link of research question 1 with questions of focus group guide and CSR-dimensions ... 33!

Table 10: Assortment of quotes for research question 1 ... 33!

Table 15: Proof of validity ... 41!

Table 16: Proof of reliability ... 42!

Table 17: Main findings of analysis ... 54!

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1 Introduction

Social responsibility (SR) with its extension towards corporate (CSR) describes the responsi-bility of companies towards all stakeholders involved in their business actions or who are af-fected to some extend by these. Since it is well established that ‘every commercial activity is affected by the world around it’ and that an ‘economic well-being’ is a major factor in today’s (business) world (Blowfield and Murray, 2008, p. 52) transparency and trustworthiness are essential CSR indicators to all (external and internal) stakeholders involved. Therefore, the term ‘stakeholders’ refers to a wider range of people e.g. shareholders, customers, but also so-ciety. The two terms SR and CSR have been heavily discussed over the last decade in busi-ness sectors and literature due to various factors. These factors include e.g. globalization, out-sourcing of production to foreign countries in order to increase business opportunities, corpo-rate values due to sustainable and financial advantages and a general rise of awareness in so-ciety. Companies are increasingly engaging in activities related to SR such as CSR reporting, minority or society support programs, and ensuring ethical manufacturing processes in order to not only ‘doing good or the right thing’, but also ‘doing better’ through the positive effects of CSR initiatives on key stakeholder groups (Bhattacharya & Sen, 2004; KPMG, 2011). The competitive advantages through the implementation of CSR are currently not effectively defined to corporate leaders (Porter & Kramer, 2006) as well as the link between CSR in-volvement and long-term financial success. Despite this, stakeholder value is crucial for busi-ness leaders1_{(McKinsey Quarterly survey of senior executives, 2009; Weber, 2008).}

The occurrence of CSR themes and first guidance of SR among international organizations (ISO 26000) of the International Standard Organization (ISO) as well as the European Com-mittee for Standardization (CEN), the United Nations (UN) or the OECD for instance, illus-trate the relevance of CSR initiatives in business sectors and society as a whole and leads to a future assumption of an on-going development due to an increased interest of acting globally (Benn & Bolton, 2011; Murphy & Yates, 2009; Henriques, 2010). Several national and inter-national CSR forums, congresses, blogs, professional journals, awards as well as consultant agencies focus on CSR process improvements. KPMG International for instance, conducts a survey about CSR reporting of companies worldwide annually in order to gain insights of CSR engagement and to illustrate its importance in today’s business environment (KPMG, 2011).

Furthermore, the importance of CSR is particularly observable in the media. The media is one of the most important independent observers of society and the business environment and has a major potential impact on stakeholders (Moutchnik, 2009 cited in ecmc, 2009) and thus car-ries out a special responsibility to act in line with trustworthy business practices, which are based on the three CSR-dimensions in media (‘opinion forming’, ‘opinion illustration’ and ‘responsibility for own CSR business actions’). The three CSR-dimensions involve the me-dia’s responsibilities towards its stakeholders and emphasize consistency in CSR strategies in order to be credible, trustful and sustainable towards content users and other stakeholders (Moutchnik, 2009, 2012; Trommershausen, 2012; Holly & Stark, 2006). The three CSR-dimensions are described as follows: ‘opinion forming’ refers to the opinions that are formed about CSR by content users based on SR content presented in media, ‘opinion illustrating’ re-fers to how SR content is generated and reflects society’s perspectives about CSR in the most

1_{The term ‘business leaders’ refers in this context to CFOs, investment professionals and finance executives from the full range of industries} and regions. Corporate social responsibility professionals and socially responsible institutional investors were included along with a simul-taneous survey from the Boston College’s Center for Corporate Citizenship.

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accurate manner. ‘Responsibility for own CSR business actions’ refers to how companies en-gage in CSR actions themselves. Moreover, the media industry is challenged by transfor-mation and modernization processes, but is still forced to face this challenge in order to em-brace its duty of information, education and entertainment towards its audience and the sur-rounding society as a whole (Albaran, 2009; Küng, 2009).

The current study emphasizes business people’s perceptions of SR topics in news media. SR topics in news content are not limited to solely SR and can already link to the business envi-ronment.

Figure 1: Link between three CSR-dimensions and perceptions of future business people

Source: Own composition based on Moutchnik, 2009.

Figure 1 helps visualize the link between the three CSR-dimensions in media and the percep-tions of future business people. The link is displayed in form of a circle in order to demon-strate an interconnectedness of the different components of the study. The 1st and 2nd CSR-dimension ‘opinion forming’ and ‘opinion illustrating’ create a link between CSR actions of media companies in the sense that appropriate, relevant and interesting SR agenda setting is accomplished as well as proper illustration of SR agenda setting is performed. Furthermore, the study focuses on future business people’s perceptions regarding SR news content in media as well as the overall perception of CSR practices of media companies, which are demonstrat-ed by the 3rd CSR-dimension ‘responsibility for own business actions.’ Moreover, future business people’s perceptions of the 1st and 2nd CSR-dimension, as well as their perceptions of other business actions of media companies relating to socially responsible actions, deter-mines future business people’s perception of the 3rd CSR-dimension.

Logic of study

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<)"+&)' If illustrating & forming done correctly _!_{Media company acting responsible}

towards ist stakeholders

3rd_{CSR-dimension}

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1.1 Social responsibility (SR) in today’s business environment

Different terms such as ‘corporate sustainability’, ‘corporate citizenship’, ‘corporate govern-ance’ or ‘corporate volunteering’ occur in literature with the focus on CSR and CR (without the word ‘social’) of companies (Holly & Stark, 2006; Moutchnik, 2009 and 2012; Tench, Bowd & Jones, 2007; Sarasin Study, 2004; Bergius, 2007). However, CSR and CR comprise the word ‘corporate’, which links social responsibility to companies’ and organizations’ busi-ness behavior. CSR, with its extension of the word ‘social’ (S), refers to responsibility to-wards all stakeholders including society and other parties, related to, or influenced by, the company or an organization’s business actions (Blowfield & Murray, 2008; 2011). The ma-jority of CSR discussions presently focus on the company’s point of view; therefore the need of consumer2 perceptions towards SR topics arises in order to create an advantage in the busi-ness environment. Table 1 below indicates a distinction between the individual terms SR and CR combined as CSR. The terms on the left hand side correspond to parallel terms on the right hand side in order to display how SR is integrated into CR (the business environment). Table 1: Transformation of SR into CSR

Source: Own composition of how SR is connected to in the business environment (CSR) and Oxford Handbook of CSR, 2008.

After having outlined the on-going importance of CSR in the business environment in gen-eral, the focus is now placed on CSR in the media industry. According to Küng, Picard and Towse (2008), the media industry is connected to technologies (print, radio, television, sound, recording and so on) through which content is generated for groups of consumers and is ‘moved and organized’ and in which media companies in the media industry operate as ‘packagers of materials that obtain those technologies’ (Küng, Picard and Towse, 2008, p.7). Fast delivery of information through new media opportunities e.g. digital devices such as mo-bile phones, table computers, etc., which provide on-demand content without space, time and language barriers (Küng, 2008; Moutchnik, 2012) reinforce consistent CSR strategies as an essential component in order to avoid a loss of trust and reliability of content users.

Studies show that consistent CSR activities generally have a positive influence on consumer perceptions, brand positioning and stakeholder value in the long run (McKinsey, 2009; We-ber, 2008; Bertelsmann Stiftung, 2005; Porter & Kramer, 2008; D’Aveni, 2007). The trend of

2_{The term ‘consumer’ refers henceforth to people who consume ‘straightforward’ products e.g. consumer goods in general.}

Social Responsibility Corporate Social Responsibility

Human rights Transparency Local community involvement

Fair behavior Responsible involvement Consumer issues Environment Ethical behavior Sustainability Responsible practices Charity donation Accountability Treatment of employees Consistent reporting Contribution to the society

Fair trade

Support of poor circumstances Stakeholder interest

Pollution decrease Labor practices

Positive contribution to the future generation Responsible decision-making Sponsoring, contribution to (local) society

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increased stakeholder awareness has made significant contributions in recent years towards CSR activities in companies, shifting the question of ‘whether’ to ‘how’ to implement CSR activities in a business’s processes (Moutchnik, 2012). According to the Forum on Corporate Governance and Financial Regulation of the Harvard Law School, business leaders should in-tegrate CSR instrumentally to enhance financial performance and shareholder value (Noked, 2011). This enhancement has to be seen under the caveat, however, that it only pays off if the CSR activities carry out long-term investment characteristics and act in line with the corporate strategy (Burke & Logsdon, 1996). However, in regards to CSR reporting, defined as one ac-tivity of CSR, opinions differ due to numerous approaches for different audiences (Kotler and Lee, 2005). In other words, CSR reports can be either conducted for self-interest or based on genuine intentions towards stakeholders. Therefore, the motivations for CSR and the audience need to be identified or set prior to reaching certain company objectives. Consequently, these are reasons for responsible actions. Why are those implemented in corporate business strate-gies? This question is essential for future success based on business value drivers such as loy-alty, trust, transparency, financial support, etc. as the stakeholders’ perspective is influencing CSR activities and companies in both ways, either positively or negatively (United Nations Environment Program, 2005).

1.2 Problematization

While previously conducted research has placed a lot of its focus on CSR that organizations engage in, there has been little debate on the CSR perceptions of consumers (Mohr, Webb & Harris, 2001). In terms of content users, who are consumers of media, perceptions of media content is a research area that has not received sufficient attention in order to determine how these perceptions form opinions about certain content.

Additionally, previous studies focus mainly on the concept of CSR processes, how CSR might be defined and what the emerging trends are that continue to shape and drive CSR as a topic of focus in all organizations, for example, how companies should engage in human rights, environmental issues and so on (KPMG, 2011; PWC, 2011; McKinsey, 2009; Um-weltministerium, 2004). However, the content users’ point of view and especially perceptions of SR topics in news media among content users has a lack of research. Moreover, it provides media companies with insight of future business people’s perceptions of the way media ap-proaches SR topics.

In news media, which is the focus of the study, CSR adds more complex and sensitive CSR components to the issue that are linked to transparency and accountability concerns in news content. Furthermore, democracy is another important component of CSR in news media, making CSR and the content users’ perspective interesting for media companies in terms of improving media standards toward stakeholders.

1.2.1 Media companies vs. (straightforward) product companies

Companies in general are under rising pressure to make monetary charity contributions, pro-tect the environment and support community work – in other words, to behave socially re-sponsibly (Mohr, Webb & Harris, 2001). This pressure is based on increased consumer awareness of company’s activities besides the core business.

In terms of the media industry, it is exposed to such pressure in a more challenging context due to the consequences that can follow from a media company not engaging in CSR

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es compared to a company that produces a straightforward consumer product. News media content users pay increasing attention to media content in terms of where news media content is generated.

When the study talks about future business people it focuses on students at Jönköping’s Inter-national Business School (JIBS) as this group is of particular interest and relevance to the study. Students at JIBS are likely to be entering the real business world in the near future, whether it is as business leaders or in other business positions. Therefore, this group is of rel-evance to news media companies as it creates more importance for a variety of SR topics in news media content as these future business people implement CSR related matters in future decision-making processes. Indirectly, society as a whole is influenced by what is released in news media in regards to SR and how it is implemented by future business people; meaning that CSR business actions essentially have an impact on stakeholders.

The challenge that media companies are facing, with focus on news media, is that they act as major contributors to forming society’s opinion due to the informative content aspect of me-dia (Moutchnik, 2012). News meme-dia is of particular interest as it requires consistency, reliabil-ity and sustainabilreliabil-ity of information in order to meet stakeholder interests. If news media companies are not following CSR practices, society forms wrong opinions regarding certain topics. These topics include current affairs such as politics and across-the-board world sub-jects. The current study although focuses on SR topics in news media.

Media content, which can be described as the ‘product’ of media companies is much more complex of nature compared to other products because of the power of news media compa-nies in democratic countries to form society’s opinions due to their ability to include any cho-sen topic in media content. This is a key reason why the three CSR-dimensions in media companies are so important, so that information accuracy is maintained.

1.2.2 Pressure on the media

One reason of increasing pressure for news media companies to adhere to the three CSR-dimensions is based on changes that digitalization has introduced, creating fast moving in-formation sources that content users use. Transparency and accountability of media infor-mation content is becoming increasingly important for media companies due to increased source availability to content users and speed of information transactions. Various online plat-forms, such as news tickers or online news magazines for instance allow content users to re-ceive continuous news updates. High speed of information distribution enabled by the internet has the potential to raise the question among content users whether quality of media content is maintained?

Not only has digitalization placed more pressure on news media companies, globalization has enabled news media companies to obtain more information and source availability has changed to a much larger scale than before. Therefore, news media companies need to ensure that only the most relevant news content is presented to content users and society as a whole as this information form an opinion among these groups (Picard, 2002). Due to increasing globalization, content users of news media also have a rising interest and opportunities to in-form themselves more about current world affairs (Küng et al., 2008; Trommerhausen, 2011). Media content users are now actively searching for information, which enables conducting in-tense research on media information and its accuracy. This may create a challenge for espe-cially news media companies in cases where business processes are not in line with the three CRS-dimensions of media companies.

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1.2.3 CSR benefits for news media companies

If news media companies consistently adhere to the three CSR-dimensions, it can be largely to the organization’s advantage. Rather than focusing only on short-term profits directly linked to CSR programmes, an approach should be taken that involves organizations to en-gage in CSR practices creating strategic benefits that may not be straight forward to measure as separate profit contributors. Benefits gained from engaging in CSR practices include for example higher revenues and overall value of the company, better reputation of the company in the eyes of its stakeholders resulting in increased loyalty. The problem is that many busi-ness leaders only see the short-term paybacks from investing in PR activities that may not have a solid CSR foundation in the future and neglect long-term benefits if no prompt results are detected. By conducting research on future business people’s perceptions of SR topics in news media, it is possible to provide more insight and guidance for news media companies on how to act in line with the three CSR-dimensions in order to act socially responsibly in a business context.

1.2.4 Research questions

1. How do future business people perceive Social Responsibility topics in news media? 2. How do future business people perceive the illustration of Social Responsibility topics in

news media? Is it applied in a corporate socially responsible manner?

3. How does opinion forming and illustrating of Social Responsibility topics influence future business people’s perception towards a news media company’s CSR?

1.3 Purpose

The conducted research provides insight into future business people’s perceptions of Social Responsibility (SR) topics in news media. These SR topics are not limited to solely SR and can already link to the business environment. Furthermore, SR in news media has possible implications for future business people’s decision-making in a business context.

The current study develops an understanding about the link between the perceptions of future business people in regards to SR topics in news media and the three CSR-dimensions of the media. This link demonstrates an interconnectedness that is based on media companies acting socially responsible towards their stakeholders.

The study focuses on future business people’s perceptions due to their exposure of being af-fected by a media company’s level of commitment to the three CSR-dimensions. Currently, future business people primarily learn about SR/CSR through social environments, including university attendance, discussions with other individuals and through media. Limited practical experience with the topic SR in a business environment is present. It is interesting to gain in-sight into future business people’s perceptions of SR topics in news media due to a possible impact on future decision-making in a business context as well as investigating how a media company’s own social responsibilities are perceived based on the three CSR-dimensions in media. A media company forms perceptions socially responsibly when the three CSR-dimensions in media have been applied by the company.

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Moreover, news media is an essential topic in today’s business environment and therefore of particular interest to current and future business people. Providing insight into the perceptions of content users towards ‘opinion forming’ and ‘opinion illustrating’ (first and second CSR-dimension) in news media enables an understanding of content users’ perceptions of a media company’s commitment towards their own CSR activities (third CSR-dimension).

1.4 Delimitation

The current study is narrowed down to media companies, with a focus on news media. Fur-thermore, it focuses on future business people’s point of view in order to provide relevant findings for a lack of studies in terms of perceptions of SR topics in news media content. The media industry is found to be attractive for this study due to its complexity and sensitivity in terms of CSR. CSR practices differ significantly for ‘straightforward’ product companies and news media companies, which are reflected in the three CSR-dimensions in media companies. News media has significant responsibility towards society and high relevance to the business environment. The study excludes social media platforms and Web 2.0 because of their differ-ent focal point as Web 2.0 and social media platforms are based on partly user-generated con-tent. In contrast, this study focuses on news content that is generated by media companies in the European Union based on similar media legislation and regulation.

1.5 Definitions

CSR – A view of the corporation and its role in society that assumes a responsibility among

companies/firms to pursue goals in addition to profit maximization and a responsibility among a company’s/firm’s stakeholders to hold the company accountable for its actions (Werther & Chandler, 2011).

CR – A view of the corporation and its responsibility towards its stakeholders and partners,

which are closely related to corporate actions. The responsibility towards society as a whole is subordinated to the responsibility towards corporate stakeholders e.g. employees, business partners, shareholders, etc. (Carroll & Buchholtz, 2003; Kotler & Lee (2005), in Trommer-shausen, 2011).

Content user/society – The study refers to ‘content users’ as individuals who actually ‘read’

news media content as a primary consumer, whereas ‘society’ is referred to when speaking of society as a whole. ‘Society’ includes content users as well as other individuals in society who are exposed to news media as secondary consumers.

ISO 26000 – The ISO 26000:2010, Guidance for social responsibility. It aims to be a first

step in helping all types of organization in both the public and private sectors to consider im-plementing ISO 26000 as a way to achieve the benefits of operating in a socially responsible manner (ISO.org, 2009; 2010).

Stakeholder – A stakeholder is by definition any group or individual that can affect or is

af-fected by the achievement of the organization’s objectives (Hebard & Cobrda, 2004 cited in Werther & Chandler, 2011).

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2 Theoretical background

Definitions, technical terms, theories of CSR and information about its background and the media form the base to understanding the upcoming analysis of the conducted research. It fur-ther supports an evaluation of former and current trend shifts of managing and behaving re-sponsibly in today’s business environment. The spotlight is placed on the perception of (C)SR in news media by future business people and the unique one-way communication role of (news) media in order to discover and prove the increasing awareness and integration of (C)SR topics in future business strategies.

2.1 Corporate Social Responsibility

The term corporate social responsibility (CSR) evokes an on-going business process, influ-enced by a political and social development in society through globalization (Thomas & Nowak, 2006). Harrison (2010, p. 191) describes CSR as businesses having a responsibility for ‘economic, social, ethical and environmental impacts of its activities’. Further, a company needs to adhere CSR to act responsible towards internal (company related) and external (soci-ety and other parties affected by the company’s actions) stakeholders with the aim ‘to make a positive contribution to the rest of society’ as well as to return some of the profit to good causes (Crowter & Capaldi, 2008; Blowfield & Murray, 2008). Crowther (2002) and Schaltegger et al. (1996) cited in Crowther & Capaldi (2008), argue that the three principles ‘sustainability’, ‘accountability’ and ‘transparency’ embrace CSR activities that should be implemented into companies’ corporate behavior and should correspond to all their actions. The following table 2 illustrates the meaning of the three principles defined by Crowther & Capaldi (2008).

Table 2: Overview of the three principles for CSR activities

Source: Own composition based on Crowther & Capaldi, 2008; businessdictonary.com, 2012; Blowfield & Murray, 2008.

Since companies face an increase of social and competitive pressure due to stakeholder awareness of international business impacts and actions, the implementation of CSR into cor-porate strategies became relevant and crucial to most corporations in order to support trust-worthiness and reliability (David (1973) cited in Kiran & Sharma, 2011). Due to stakeholder pressure, companies’ actions face increasing demand for acting responsibly towards various issues such as environment, global collaborations (outsourcing of productions and services) and its challenges with regards to labor practices, human rights (corruption, bribery, etc.),

Sustainability Accountability Transparency

•  Resources are only used to the extend they can regenerate •  Ecosystem (input/output) models

of resource consumption •  Observing an organization as

part of a broader society and economic system with regards to the future generation

•  Company’s obligation to account for activities since it affects the external environment

•  Concept of accountability implies a consistent reporting to all stakeholders (internal + external) •  Recognition of the potential

impact of external stakeholders on the company’s future actions due to different values and priorities

•  Periodical reporting and public insight (can lead to an increase of stakeholder trust and strengthen long-term relationships)

•  Particularly important for external users, since these users lack of background details available to internal stakeholders (opinion forming in society)

•  Accessibility of company’s actions and decision-making processes

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consumer issues, to name only a few. The issues of ‘accountability’ and ‘transparency’ pre-sent an espre-sential asset of how CSR actions are perceived and how products and services are recognized and judged by customers, society and other stakeholders (Blowfield & Murray, 2008). The reputation and success of present day companies is progressively determined by numerous internal and external factors, which have the power to affect buying decisions and the attractiveness of companies in general. Two diverse definitions (table 3) of CSR with re-gards to current business strategies are prevalent today and perceived differently in the busi-ness environment.

Table 3: Two prevailing positions of means of CSR in today’s business environment

Source: Own composition of existing contrast CSR conception in the business environment

Keith Davis (1973) cited in Crane et al. (2008), argues that CSR requires a ‘consideration of issues beyond the narrow economic, technical, and legal requirements of the firm’. The aim of CSR from this perspective therefore denotes that ‘corporations have an obligation to constitu-ent groups in society other than stakeholders and beyond that prescribed by law or union con-tract’, (Jones (1980) cited in Crane et al., 2008). This means that CSR actions of companies should go beyond regulations, which are necessary to be observed and should be implemented into management in order to avoid ‘green washing effects’3 as well as the use of CSR due to public relation (PR) motivations (Siegle, 2004 cited in Tech, Bown and Jones, 2007). PR should instead be the strengthener of successful CSR strategies, not the driver in order to avoid backfire effects due to untruthful and intransparent business actions.

According to Werther & Chandler (2011, p. 94) five forces are ‘driving CSR to the forefront of corporate strategic thinking: growing affluence, ecological sustainability, globalization, communications technologies, and brands’. These forces restructure the business environment by decreasing the power of stakeholder groups (Werther & Chandler, 2011) in order to follow a more flexible, but reliable corporate strategy.

3_{Greenwash: The act of misleading consumers regarding the environmental practices of a company or the environmental}

benefits of a product or service (Gunther (2004) cited in Werther & Chandler, 2011).

CSR and the aim of profit maximization CSR and the aim of positive contribution towards all stakeholders

•  CSR comprises the central aim for businesses to maximize profit with regards to a minimum of ethical behavior and human rights; public relation reasons (PR) are common driving forces for the integration of CSR into corporate strategies (Friedman, 1970; Levitt, 1983; Kiran & Sharma, 2011; Bergius, 2007).

•  ‘CSR is a logic argument for businesses obtaining to maximize performance by minimizing

restrictions on operations’. ‘[!] CSR represents a means of anticipating and reflecting societal concerns to minimize operational and financial limitations on business’ (Werther & Chandler, 2008).

•  ‘CSR (is) the proposition that companies are responsible not only for the maximizing profits, but also recognizing the need of such stakeholders such as employees, customers, demographic groups and even the regions they

serve’ (PricewaterhouseCoopers, 2004). •  ‘CSR is a concept whereby companies integrate

social and environmental concerns in their business operations and in their interactions with their stakeholders on a voluntarily basis’ (European Commission, 2011).

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2.1.1 CSR history and development

The origins of CSR and its perception can be traced back into the mid-twenties of the last cen-tury, when the business community’s concern for society began to grow (Crane et al., 2008). Since globalization flourished, CSR gained increasing importance in business due to (differ-ent) societies’ diverse and complex expectations of ideal business actions and behavior (Blowfield & Murray, 2008). No exact definition of CSR can be determined, since different interests, priorities and values competing constantly against each other are determined by trend shifts in society and in the business environment. Since 1950, it is well defined that through different societies worldwide with diverse stakeholder expectations, CSR has to be developed constantly. In 1979, Carroll described four types of responsibility (figure 2), which are commonly mentioned in order to understand the basis of different aspects of CSR that had surfaced.

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11 Figure 2: Caroll’s CSR and explanation of its components

Source: Caroll’s pyramid of CSR adjusted to current study, taken from Business Horizons, 34(4), p. 43, 1991. PHILANTHROPIC

Responsibility

Be a good corporate citizen.

Contribute resources to the community; improve quality of life

ETHICAL Responsibility

Be ethical.

Obligation to do what is right and fair. Avoid harm

LEGAL Responsibility

Obey the law.

Law is society’s codification of right and wrong. Play by the rules of the game

ECONOMIC Responsibility

Be profitable.

The foundation upon with all others rest

ECONOMIC

Responsibility Responsibility LEGAL

ETHICAL Responsibility PHILANTHROPIC Responsibility •  Important to perform in a manner consistent with maximizing earnings per share •  Important to be committed to being as profitable as possible •  Important to maintain a strong competitive position •  Important to maintain a high level of operating efficiency •  Important that a successful firm is defined as one that is consistently profitable

•  It is important to

perform in a manner consistent with expectations of government and law

•  Important to comply

with various federal, state, and local regulations •  Important to be a law-abiding corporate citizen •  Important that a successful firm is defined as one that fulfills its legal obligations

•  Important to provide

goods and services that at least meet minimal legal requirements

•  Important to perform in

a manner consistent with expectations of societal mores and ethical norms

•  Important to recognize

and respect new or evolving ethical/ moral norms adopted by society

•  Important to prevent

ethical norms from being compromised in order to achieve corporate goals

•  Important that good

corporate citizenship be defined as doing what is expected morally or ethically

•  Important to recognize

that corporate integrity and ethical behavior go beyond mere compliance with laws and regulation

•  Important to perform in a

manner consistent with the philanthropic and charitable expectations of society

•  It is important to perform

in a manner consistent with the philanthropic and charitable expectations of society

•  It is important that

managers and

employees participate in voluntary and charitable activities within their local communities

•  It is important to provide

assistance to private and public educational institutions

•  It is important to assist

voluntarily those projects that enhance a

community's "quality of life"

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The philanthrophical point of view changed from a former interpretation of donating at the end of the financial year to an all year around responsibility of companies since the definition of stake-holders is expanded (UK Prime Minister, Gordon Brown cited in Harrison (2010, Kotler and Lee, 2005). The character of corporate philanthropy has developed over time, predominantly in ‘re-sponse to internal and external pressures to balance concerns for shareholder wealth with expecta-tions to demonstrate responsibility for communities contributing to the corporation’s livelihood’ (Kotler and Lee, 2005, p. 145). The wider definition of stakeholders pressured several companies to reinforce their CSR involvement. Since 2009, CSR reporting became an increasing necessity for multinational and other companies because of stakeholder pressure on transparency and their de-mand for responsible business behavior (KPMG, 2011). CSR trend reports of ‘CRReportingAward’ 2011 discovered that 81 per cent of all companies increasingly provide CSR information on their websites, but only 50 out of the 81 per cent link to their CSR reports on the corporate website (PwC, 2011). Contrastingly, KMPG proved that 95 per cent of the 250 biggest companies world-wide and 64 per cent out of 34 chosen countries prove CSR involvement ‘KPMG Corporate Re-sponsibility Survey 2011’ (figure 3). The components ‘reputation and brand’, ‘ethical considera-tion’ and ‘employee motivaconsidera-tion’ are mentioned as the three most important reasons for companies to implement CSR into their corporate strategy (figure 4). ‘Economic considerations’ was ranked second with 68% in 2008, but is mentioned by only 32% (KPMG International Corporate Respon-sibility Survey, 2011).

Figure 3: Development of CSR reporting until 2011

Source: KPMG International Corporate Social Responsibility Survey, 2011 & Corporate Register.com, PwC, 2011 and CRReporting Award, 2010.

Figure 4: Important components for CSR implementation of KPMG survey

Source: KPMG International Corporate Social Responsibility Survey, 2011. Number of reports

Source: Corporate Register, 2010 Source: KPMG International survey of CSR reporting, 2011

G250

(worlds largest companies) 1993 1996 1999 2002 2005 2008 2011 0% 20% 40% 60% 80% 100% 1992 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 0 500 1000 1500 2000 2500 3000 3500 4000 Company reporting in % N100

100 largest companies of 34 countries included in the study Reputation or brand Ethical consideration Employee motivation 44 57 58 69 55 67 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2008 2011

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2.2 Three CSR-dimensions in media

The three CSR-dimensions in media are defined as ‘opinion forming’, ‘opinion illustrating’ and ‘re-sponsibility for own business actions’ or as Moutchnik (2009) names the third dimension ‘media management’ which links to the responsibility of media companies’. The first CSR-dimension de-scribes the responsibility of media companies to form opinions among society and other stakehold-ers based on the variety of current SR related topics and concerns, mirroring present society issues based on environment, life and business. The second dimension ‘opinion illustrating’ refers to the responsibility of media companies to create content in a trustworthy and reliable manner. The third dimension ‘responsibility for own business actions’ links to the responsibility of media companies’ own CSR related actions in particular and to general responsible business behavior. This means that media companies have to follow corporate responsibility standards such as e.g. ISO management systems4 and have to integrate internal and external stakeholder interests in the CSR strategy deci-sion-making processes to emerge advantages and disadvantages and in order to gain confidence about all factors that influence a responsible business behavior in the media sector e.g. sustainable employment of resources, internal efficiency such as number of editorial staff and so on. ‘The me-dia’s main impact is not environmental, but psychological and intellectual’ (WWF Great Britain, 2004) and therefore faces the pressure to contribute to go beyond regulations in order to support so-ciety and other stakeholders in the most trustworthy manner. The general threat of the media sector today5_{enlarges challenges due to a need of efficient and sustainable management and according to}

Moutchnik (2009) the social and ecological consideration of media companies can be realistically ensured after having reached certain financial wealth (figure 5). A media company’s responsible actions are particularly observed by all stakeholders due to media’s general duty of opinion forming with the support of information distribution.

The current study investigates future business people’s perceptions of SR topics in news media. The first and second CSR-dimension ‘opinion forming’ and ‘opinion illustrating’ has an impact on fu-ture business people’s perceptions towards a news media company’s CSR as well as a media com-pany’s other business activities (third CSR-dimension ‘responsibilty for own business actions’). In conclusion, the two CSR-dimensions ‘opinion forming’ and ‘opinion illustrating’ in media do not lead to any competitive advantage if CSR strategies within the company itself are inconsistent and not transparent as well as contain risks of backfire effects (Moutchnik, 2009). Backfire effects can rise due to one-sided agenda setting or too little transparency of content illustration for example. This can have negative implications on content user trust. Media companies face more than one challenge in order to increase sustainability based on the perspective of their readership (Bonfadelli (2007) cited in Moutchnik, 2009).

4_{ISO management systems: ‚Management system refers to what the organization does to manage its processes, or activities, so that}

its products or services meet the objectives it has set itself, such as: satisfying the customer's quality requirements, complying with regulations, or meeting environmental objectives’ (ISO.org, 2012). Further, ISO management system standards contain a operating principle in order to reach ‚ a consensus as being the international state of the art’ Plan- Do-Check-Act (ISO.org, 2012).

5_{Threat of media sector: Since 2003, even before the financial crisis, the media industry faced major challenges of a general decline}

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Figure 5 illustrates the difference of the three CSR-dimensions in the media and emphazises differ-ent belongings.

Figure 5: Three dimensions of CSR and its impact on media content users’ perceptions

Source: Own development examples and partly based on the 3 CSR-dimensions of the media, Moutchnik 2009.

The role of content users and especially their opinion towards media content and the media itself are key functions if focusing on CSR in the media industry. Since consumers respond to social and economic forces such as technologies and trends, today’s media consumption is strongly deter-mined by products and services that businesses provide (Küng, Picard and Towse, 2008). This means that (news) media companies have to adjust to new technologies by making their content dis-tribution suitable to e.g. table computers, mobile devices and other modern devices. This demand for a constantly fast distribution requires the same variety of (C)SR topics as well as the most relia-ble resources as possirelia-ble and therefore increases the challenge of investigative journalism due to pressure based on time and money restrictions (Aris & Bughin, 2005; McQuail, 2003; Trommer-shausen, 2011; Wyss, 2000). (News) media companies are transmitters of information to society and other stakeholders and additionally have primary power of general opinion forming through agenda setting and of the way content is conduced and presented to the audience (Moutchnik, 2009; Schultheis, 2008). Therefore, it is crucial to clarify why CSR practices and actions are implemented to outline the importance of the three CSR-dimensions to the news media industry. This clarifica-tion narrows down potentials that can be transformed into further implicaclarifica-tions if drawing attenclarifica-tion to different stakeholder interests by integrating CSR topics into news media content.

Opinion forming Opinion illustration _{own business actions}Responsibility for Three CSR-dimensions

•  Variety of SR/CSR topics •  Topics should contain

society’s reflection of SR concerns

•  Wide distribution of topics •  Wide satisfaction among

readership with SR topics •  Independent observer of

society and economic system > independent topic

assortment

•  Independence of content conduction and publication •  Avoidance of superficial investigation (misleading) •  Objectivity conduction of content •  Investigative journalism >quality of content •  Inclusion of background information

•  Internal and external stakeholder treatment •  Consideration of CSR

strategies (e.g. codes of conduct, ISO)

•  Consideration of global labor practices and its positive support > print production •  Payments of global information resources •  Responsible handling of resources •  Contribution to local communities •  Responsible activities beyond regulations

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2.3 Stakeholder theory

Kuhn and Shriver (1992) cited in Freeman (1994, p. 409) carry out the idea that stakeholder rela-tionships are seen and managed as a whole instead of following a ‘constituency view that sees the corporation and its stakeholders as a voluntary community’. The external factors ‘society’ and ‘en-vironment’ have an increasing influence in terms of acting sustainable due to globalization and its trust of stakeholders and limited future resources. Therefore, CSR has grown to be a crucial part of business activities. The stakeholder theory describes that all relationships between groups and ‘in-dividuals (“stakeholders”), each with (a) the power to affect the firm's performance and/or (b) a stake in the firm's performance’ Freeman (1984) cited in Jones (1995, p. 407), have an impact on the company’s image, value and sustainability (Crane et al., 2008). Table 4 demonstrates the change of the stakeholder theory.

Table 4: The change of stakeholder definitions

Former stakeholder definition Modern (current) stakeholder definition • Shareholders • Customers/consumers • Suppliers • Distributors • Employees • Local communities

• Stakeholder representatives such as trade unions or trade associations of suppli-ers or distributors

• NGOs or ‘activists’ that have been considered individually or as stakeholder rep-resentatives

• Competitors

• Government(s), regulators, and other policymakers

• Financiers other than stockholders (creditors, bondholders, debt providers) • Media

• Public in general

• Non-human aspects of the Earth, the natural environment • Business partners

• Academics

• Past generations (in particular the memory of founders of organizations)

Source: Development of stakeholders taken from Friedman & Miles, 2009.

2.3.1 History and development

The stakeholder concept has its roots before the early 1960s. Dodd (1932) cited in Friedman & Miles (2009) defines four groups as stakeholders: shareholders, employees, customers, and the gen-eral public whom businesses encounter with. In 1947 Preston and Sapienza (1990) emphasize the importance of ‘customers, employees, managers and the public’ (cited in Friedman & Miles, 2009). Since Caroll’s wider definition of CSR components in 1979, the perspective of CSR changed due to a redefinition of stakeholders. A wider consideration of parties (stakeholders) who are to some ex-tent influenced by company’s business actions arises and constantly supports an on-going process of a general demand of corporate responsible business behavior (Friedman & Miles, 2009; Harri-son, 2010). Freeman (1984) cited in Friedman & Miles (2009), contributed to the stakeholder dis-cussion with his view of corporations and the stakeholder approach, which in his eyes is necessary to be implemented into strategic management due to instability in the business environment. In oth-er words, Freeman surfaces the issue of the formoth-er business aim to seek for efficiency and effec-tiveness without any respect to the stakeholder extension (Friedman, 1970). Freeman (1984) defined a stakeholder as ‘any group or individual who can be affected, or is affected by, the achievement of the organization’s objectives’ and divides those groups into two categories: direct (e.g. owners, shareholder, employees) and indirect (e.g. government, community) stakeholders (Friedman &

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Miles, 2009). The disregard of the mentioned increasing stakeholder power can lead to regulatory damage in foreign countries, suffering from loss of markets to external competitors and loss of gen-eral trustworthiness of foreign business partners (Friedman & Miles, 2009). Jones (1995, p. 404) al-so mentioned already 17 years ago that ‘a subset of ethical principles (trust, trustworthiness, and cooperativeness)’ could lead to a significant competitive advantage in the business environment if the corporate morality is analog to the individual morality. Meaning that moral business decisions and actions have to be in line with the corporate strategy and that the company’s work force also has to act in line with CSR guidelines in order to reinforce consistency and therefore trustworthi-ness among stakeholders.

2.3.2 Modern perspective and its relevance today

The stakeholder theory today is influenced through a general awareness of consumers and interna-tional business partners and parties who are to some extent related to the company’s actions (Lewis (2001) cited in Tech et al., 2007; Jamali, 2008). CSR is one of the most important key functions for companies to ensure their competitive advantage in the global market, to maintain their reputation and to be able to satisfy different stakeholder interests (Porter & Kramer, 2006). Therefore, today’s term ‘investment’ enhances a new significant characteristic, namely ‘reputational’ besides the re-nowned ‘financial’ one (Knox & Maklan, 2004). In today’s business environment the reputation of companies is essential to fulfill financial solidity and an on-going attractiveness towards sharehold-ers and future employees. However, the investment in responsible actions only leads to potential benefits and savings if they are implemented efficiently (Sprinkle & Maines, 2010). The relevance of several unforeseeable global influences is an on-going risk for companies. The awareness of trend shifts and different stakeholder interests as well as demands for an international positioning exemplifies the necessity for consistent responsible business actions in order to fulfill today’s re-quirements for long-lasting success (McWilliams & Siegel, 2001; Knox & Maklan, 2004).

2.4 Media

According to Küng et al. (2008), media can be defined as a number of communication means. Commonly used terms for media based on its most recognized types are television, newspapers and the radio. Media can also be referred to as a collective description for news reporting agencies and the press. Furthermore, media has the ability to reach a vast amount of individuals worldwide. Me-dia can be referred to as the voice of people and thus society as a whole when emphasizing society as the receiver of media messages (Picard, 2002). As mentioned earlier, the media and news media in particular has a special responsibility towards its stakeholders. The three CSR-dimensions are representatives for this special responsibility that the media holds.

2.4.1 Europe’s media environment

According to Mergent (2008), today’s media industry in the EU is one of the most diverse and democratic in the world, providing media content to individuals from various backgrounds, ethnic groups as well as different religions. The industry is known for being friendly towards foreign in-vestments based on its legislations. Furthermore, the European media industry has experienced im-mense fast changing technological changes in recent years that have caused the industry challenges as well as opportunities. Challenges for example include the issues of trust and responsibility to-wards media content users and thus society as a whole due to fast distribution opportunities for me-dia. Moreover, European authorities are becoming stricter in terms of copyright and intellectual property policies (Mergent, 2008).

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In 2008, during the financial crisis, the environment of the European media industry has grown at a slower pace than over the previous years. In terms of finances, a large number of the leading Euro-pean media companies show weaker performance over the episode (Picard, 2002). The print media sector has shown a decline in circulation, readership and revenues while efforts of media companies to invest into non-print media has helped diminish the impact of such a decline. During the financial crisis broadcast media was performing much better and took benefits from increased use of new and online media due to cost reasons (Mergent, 2008).

2.4.2 Media landscape

The media industry today offers a large scale of different channels with the potential of reaching a wide audience simultaneously. The introduction of the internet in particular has initiated a changing media landscape in recent years. Trommerhausen (2012) suggests that digital media networks such as mobile devices, portable internet, social networks and Web 2.0 applications belong to the main drivers of the current change of today’s media consumption. Telecommunication, information, me-dia and entertainment which Trommerhausen describes in short as TIM(E) is now recognized as combined and forms today’s trend shift of media consumption in society (Trommerhausen, 2012). TIM(E) is interconnected since the telecommunication sector provides digital media compatible de-vices, distributing information and entertainment. Furthermore, the new media landscape gives rise to new challenges, advantages as well as disadvantages due to fast distribution (e.g. online news tickers, user generated blogs). Such disadvantages can for example lie in risks of decreasing democ-racy (e.g. mass media and its greater confusion about quality and veracity) and gaps in the quality of journalism (e.g. smaller budgets and less time for qualitative content preparation), different for-mats of media presentation (e.g. portable mobile devices, table computers). Furthermore, technical developments and a shift in preferences of how media is consumed today create new challenges for media companies due to faster distribution. Awareness of the impact of communication, responsible advertising, digital devices and transparent ownership are only a few of these challenges for media companies (Media CSR Forum, 2012).

2.5 News media

News media is a broadly used term that generally describes all types of media that are utilized for distributing the news. These types of media, so called media channels encompass traditional print media such as newspapers and news magazines, broadcast media such as news television stations and the radio. Furthermore, recent changes in technology have brought along internet media, e.g. news web pages, to the media industry (Pinkleton, Zhou, Willoughby & Reiser, 2012). More gener-ally speaking, Hjavard (2001) describes news media as encompassing new information regarding a certain topic of recent happenings that have not been previously publicly discussed. New infor-mation may include inforinfor-mation about an individual or group as well as other happenings that re-quire special attention in form of any material that is used to spread or distribute the news. Moreo-ver, the term ‘media’ is used to describe the approach to which something is presented; for example, the method for delivering or creating something. Media (the plural of ‘medium’) describes the way in which an information message, in this case news information, is delivered (Hjavard, 2001). News media has more complex responsibilities towards its stakeholders then other forms of media; entertainment media for instance. The focus of this special responsibility lies in media’s power to form opinions. Therefore, it is particularly important for news media to adhere to the first and se-cond CSR-dimension of media (‘opinion forming’ and ‘opinion illustrating’) in order to act in line with CSR practices. The third CSR-dimension ‘responsibility for own business actions’ is followed by news media companies when the first and second CSR-dimensions in media are carried out effi-ciently and fairly, keeping in mind stakeholder interests. Additionally, other business practices of

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news media companies such as paying attention to impact mitigation relating to paper production processes for example must be in line with CSR practices also in order to perform in line with the third CSR-dimension.

Table 5:Overview of different media types (categories, channels and characteristics)

Source: Own composition and extension, based on ACT, 2008; Fraunhofer institute IML, 2012; UdK Berlin, 2012.

Table 5 outlines the different media types and its categories, channels and characteristics. All media types entail a number of individual characteristics that may vary from ‘slow speed’ for traditional media to ‘future simulation’ for future web. Furthermore, channels for each media type are present-ed; varying from books and magazines for traditional media for instance to digital TV for new me-dia to social communities that are linked to social meme-dia.

Traditional Media New Media Social Media Future Web

Information &

Entertainment Communication Info-/Commutainment Internet of Things

Channel/Frequency Portal Platform Filter

Informational news General news Message Semantic Web

Delegation Interaction Self-organization Participation/sharing

Newspaper Website Weblog Tweets

Point of Sale E-commerce Social commerce Multi-channeling/Point of _interest

Radio/TV Streaming Podcast Audio-visual simulation

LP CD MP-3 Lossless audio

Walkman Discman iPod Sound cloud

Non-digital desktop Digital desktop Webtop/Cloud Augmented desktop

C ate g o ri es •! Book

•! Magazin •! Digital newspaper,

•! Digital TV, •! Digital radio (Internet - mobile •! ISDN, UMTS

•! Social community, •! (mobile device, table

computes e.g. iPhone, iPad)

...

•! Slow speed

•! Complex copy process •! No interactivity •! Lean-back

•! Fast distribution •! Simple copy process •! High interactivity •! Lean-forward

•! Fast distribution •! Simple copy process •! Highest degree of interactivity •! User generated content •! Jump-in •! Unreliable source (due to potential anonimaty) •! Peep-out •! Future simulation A d d iti o n al Channels C h ar ac te ri sti cs

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19 Figure 6: Branches of the media industry

Source: Based on ‘Branches of the media industry’, Küng, 2009.

The different branches of the media industry in figure 6, defined by Küng (2009) refer to media species (y-axis) and media functions (x-axis). Video, audio, image and text (media species) and its functions of information, education and entertainment are displayed in terms of their correlating primary distribution formats. Blogs and social media are added to media types due to modern tech-nology progresses.

2.5.1 News media in a global context

News media has a history of operating across national borders for the purpose of distributing news about world events. Prior to globalization news media was primarily focused on nation-centeredness. The changing international environment started to challenge the national approach to news media. Globalization and therefore an increasing interconnectedness of news media have re-sulted in a more global network society (Hjarvard, 2001). According to Clausen (2002), the trend towards global news media creates a complex news scenario while the consequences of technologi-cal development, such as the introduction of the internet, has had major influence on globalization processes and therefore creates a challenging impact on news communication (cited in Kim, 2002). National news media companies select international news content increasingly from global and lo-cal news suppliers. Consequently, the news media company’s role as an intermediary builds a na-tional cultural identity towards its own nana-tional society based on other nana-tional identities. Commu-nication strategies in news media content and the choice of topics chosen become therefore cultural-ly responsive. In other words, increased globalization has an impact on the topics that news media includes through a change of news media companies’ communication strategies (Clausen cited in

Media species Media functions Video Audio Image Text

Information Education Entertainment

Newspapers Trade Journals TV Radio Music Books Movies Magazines Social Media Blogs