PAPER WITHIN: Sustainable Supply Chain Management AUTHOR: Alicia Rapp & Ida Vesterberg
TUTOR: Ewout Reitsma
JÖNKÖPING May 2020
CSR in manufacturing SMEs:
a case study of a Swedish
Address: Visiting Address: Phone Number:
Box 1026 Gjuterigatan 5 036-10 10 00
551 11 Jönköping
Acknowledgments
We want to take the opportunity to thank everyone that made this thesis possible. We want to express our gratitude towards the company Ragnars for contributing with valuable discussion and insights. Without whom the achievement of this paper would not be possible.
We would also like to express our sincere gratitude towards our supervisor, Ewout Reitsma, who has supported us during the whole process with his views and inspiring ideas. His engagement, advice, and constructive feedback assisted us in accomplishing this study in the best possible way.
Finally, we want to thank everyone else that has given us input during the process. We could not have done this without you!
Jönköping 2020-05-17
______________________ ______________________ Alicia Rapp Ida Vesterberg
This thesis has been carried out at the School of Engineering in Jönköping in the subject area Sustainable Supply Chain Management. The authors take full responsibility for opinions, conclusions and findings presented.
Examiner: Marco Santos Supervisor: Ewout Reitsma Scope: 15 credits Date: 2020-05-07
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Abstract
Purpose – The purpose of this study is to generate a broader understanding of how and why SMEs works with CSR activities.
Method – The methodological choice for this thesis is based on a qualitative research approach. A case study is conducted at one Swedish SME, and the data is primarily collected through an interview with two respondents from the case company who have active roles within the CSR plan. A document study was used as a complement source of data to strengthen the data collected from the interview.
Findings – The findings indicated that it can be preferable that an SME’s owner-manager champions the implementation of CSR activities. It is also evident that the reasons behind CSR engagement are dependent on the owner-manager ability to see the organizational benefits generated through the implementation of CSR activities. The research also finds that SMEs tend to lack a clear strategy when it comes to CSR implementation, which is performed on a more ad hoc basis as SMEs typically do not have the resources for deliberate ’strategizing’.
Limitations – The research has investigated how a manufacturing SME works with CSR beyond requirements from law and regulations, as well as receive a better understanding of what motivates them to implement CSR activities. Moreover, this research project has not included participant observations as the circumstances made them impossible to perform.
Keywords - Corporate Social Responsibility (CSR), Small- to Medium Enterprises (SMEs), CSR Activities, Managerial Values, Manufacturing, CSR Engagement.
Contents
1
Introduction ... 6
1.1 BACKGROUND ... 6
1.2 PROBLEM STATEMENT ... 7
1.3 PURPOSE AND RESEARCH QUESTIONS ... 8
1.4 DELIMITATIONS ... 8
1.5 OUTLINE ... 9
2
Theoretical Framework ... 10
CORPORATE SOCIAL RESPONSIBILITY DEFINITION ... 10
MOTIVATION BEHIND CSR IMPLEMENTATION IN SMES ... 11
2.2.1 Internal Drivers vs. External Pressure ... 13
THE ROLE OF MANAGERIAL VALUES IN RELATION TO CSR ... 13
CSR ENGAGEMENT... 14
2.4.1 Social Responsibility ... 15
2.4.2 Stakeholders and Shareholders ... 16
2.4.3 Environmental Performance ... 16
CSRACTIVITIES... 17
3
Research Methodology ... 20
RESEARCH PHILOSOPHY AND APPROACH ... 20
3.2 RESEARCH DESIGN ... 21 3.2.1 Case Company ... 21 3.2.2 Sampling method ... 22 3.3 DATA COLLECTION ... 22 3.3.1 Interviews ... 22 3.3.2 Document studies ... 23 3.4 DATA ANALYSIS ... 23 3.5 RESEARCH QUALITY ... 24 3.5.1 Ethics ... 24 3.5.2 Validity ... 24
4
3.5.3 Reliability ... 25
3.6 RESEARCH PROCESS ... 26
4
Empirical findings and Analysis... 27
4.1 FINDINGS ... 27
4.2 ANALYSIS ... 33
4.2.1 Research Question 1: What motivates SMEs to work with CSR?... 33
4.2.2 Research Question 2: How does SMEs conduct their CSR? ... 36
4.2.3 Research Question 3: What CSR activities does an SMEs perform? .... 38
5
Discussion and Conclusions ... 40
5.1 DISCUSSION OF FINDINGS ... 40
5.1.1 Research Question 1: What motivates SMEs to work with CSR?... 40
5.1.2 Research Question 2: How does SMEs conduct their CSR? ... 40
5.1.3 Research Question 3: What CSR activities does SMES perform? ... 41
5.2 DISCUSSION OF METHODOLOGY ... 41 5.3 CONCLUSIONS ... 42 5.4 PRACTICAL IMPLICATIONS ... 43 5.5 FURTHER RESEARCH ... 43
6
References ... 44
7
Appendices ... 49
List of abbreviations
CSR – Corporate social responsibility SME – Small and medium sized enterprise MNC – Multinational corporation
5
List of Figures
Figure 1: Report outline ... 9
Figure 2: Model of the research approach. (Based on Saunders et al., 2016). ... 20
Figure 3: Data Analysis ... 24
Figure 4: The research process ... 26
List of Tables
Table 1: CSR activities ... 18Table 2: List over case company criteria ... 22
Table 3: Ragnars Code of Conduct ... 28
Table 4: Ragnars Environmental Goals (stated in Ragnars Code of Conduct) ... 30
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1
Introduction
This chapter presents the introduction to this research paper. It includes background, problem statement, purpose and research questions, scope and delimitations, and an outline of the research report.
1.1 Background
The pressure on Small- to Medium Enterprises (SMEs) to implement Corporate Social Responsibility (CSR) and to be transparent with their CSR activities has grown (Jenkins, 2006). Over the past decades, the concept of CSR has been widely studied as businesses are becoming more aware of the importance of and benefits linked with CSR. CSR is defined by the European Commission (2011, p.6) as “the responsibility of enterprises for their impacts on society”. There is growing research on the topic of CSR in academic literature. However, there is no universal definition of the issue (Malik, 2015). Companies often define CSR in accordance with their own company (Jenkins 2009), and CSR is often defined differently depending on business, nationality, and knowledge within the subject. As for this research project, we develop our discussion by following the European Commission’s (2011, p. 6) most recent definition of CSR, “the responsibility of enterprises for their impacts on society”. Additionally, CSR activities in this research project are activities aligned with the concept and definition of CSR.
The European Commission (n.d.) defines SMEs as companies occupying 1-249 employees and with an annual turnover up to EUR 50 million. SMEs does often have a longstanding relationship with their local communities and societies (Dias et al., 2019). SMEs account for 99.9% of the total number of companies in Sweden (Persson, 2020). Also, in Sweden, the manufacturing industry constitutes for 4,4% of the Swedish business world (Holmström, 2019) which makes it an essential industry. Another pressure point that businesses are facing is today’s competitive business climate, and this has led to the discussion of whether the implementation of CSR strategies is beneficial in attaining competitive advantage (Jenkins, 2009). The attention of CSR research has mainly consisted of multinational corporations (MNCs) (Baumann-Pauly et al., 2013). In Sweden, the focus on CSR has similarly been on larger firms and not on SMEs (Baumann-Pauly et al., 2013). Hence, when comparing MNCs and SMEs, the knowledge about CSR in SMEs is small (Jenkins, 2004), even though SMEs account for 99,9 % of the total number of companies in Sweden (Persson, 2020). Increasing interest in SMEs had led to the conclusion that CSR interest is as significant for SMEs as they are for MNCs (Jenkins, 2004).
7 1.2 Problem statement
There are several reasons why research linking SMEs and CSR is essential. The knowledgebase linking CSR theory with CSR practices is still an area of interest for researchers and their aim of obtaining more information regarding the relationship between MNCs, SMEs, and CSR (Perrini, 2006).
First, there is a growing interest in the implementation of CSR activities (Goyal & Kumar, 2017) in today’s business world. Aforementioned, the literature concerning CSR often focus on MNCs (Porter & Kramer, 2011). There is, however, a broad agreement that SMEs have a meaningful and significant economic force and that their strategic result in terms of CSR in SMEs is of equal importance (Morsing & Perrini, 2009). Therefore, according to (Crane et al., 2018), there is a clear need for theoretical and empirical research that, in turn, will lead to a more rapid knowledge creation regarding CSR engagement in SMEs.
Second, engaging in social responsibilities is of growing concern in today’s competitive business climate, and the commitment to CSR activities is a contemporary pressure point (Jenkins, 2009). CSR strategies deal with sustainable environmental, social, and economic development and are today a necessity to stay competitive (Jenkins, 2009). Future studies ask to consider qualitative research examining the motivation behind CSR engagement due to the business case for SMEs to implement CSR activities into the operations in terms of competitive advantage (Panwar et al., 2017).
Third, the need for CSR engagement in SMEs is becoming more critical as MNCs are incorporating CSR strategies into their operations (Perrini, 2006). It is a growing pressure point as SME account for a majority of business and often plays an essential role in nearby communities and societies (Perrini, 2006). In order for this to be demonstrated, there is a need to fill the gap in the literature assessing CSR in SMEs in a more general sense (Baumann-Pauly et al., 2013).
Fourth, in Sweden, the manufacturing industry constitutes 4,42% of the Swedish business world (Holmström, 2019), which makes it an essential industry. SMEs account for 99,9 % of the total number of companies in Sweden’s business industries (Persson, 2020), and the knowledge about CSR in SMEs is small (Baumann-Pauly et al., 2013), the need for further research linking SME and CSR is essential.Additionally, there is a low level of integration of CSR in manufacturing SMEs’ day-to-day operations (Baumann-Pauly et al., 2013). SMEs often do not actively engage in CSR work such as social engagement, due to characteristics such as smaller size and lack of motivation of owner-managers (Baumann-Pauly et al., 2013). Therefore, there is a need to further research these aspects in order to generate more knowledge regarding how and why this should be approached.
Last, Carson et al. (2015) argue for the sensemaking of CSR as Sweden has a robust legislative network of consensual political culture and a robust social-democratic welfare state, e.g., offering social benefits and safe working conditions. Sweden has a strong foundation when it comes to welfare in the form of the state and trade unions (Lee et al., 2016). However, there is a growing interest in establishing CSR-aligned a goal, e.g., environmental goals for the individual company (Persson, 2020). A
8 contemporary issue is the lack of governmental attention to the relevancy of CSR implementation (Goyal & Kumar, 2017). The need to further promote the beneficial aspects of CSR implementation firstly needs to address the current lack of knowledge and research within the subject in order to be able to correctly enable these implementations in SMEs (Goyal & Kumar, 2017).
1.3 Purpose and research questions
As little research has been conducted about SMEs engagement in CSR activities, the purpose of this research paper is:
To generate a broader understanding of how and why SMEs work with CSR activities. Three research questions are formulated in order to answer the purpose. The formulation of the first research question is in order to get a better understanding of why they have chosen these specific activities to engage in. Therefore, the first research question is:
1. What motivates SMEs to work with CSR?
The formulation of the second research question is in order to provide a more in-depth understanding of how the SME operates concerning its CSR activities. Therefore, the second research question is:
2. How does SMEs conduct their CSR?
The third research question is about to identify what activities the SME performs. Therefore, the first last question is:
3. What CSR activities does SMEs perform?
1.4 Delimitations
The research will investigate how a manufacturing SME works with CSR beyond requirements from law and regulations, as well as receive and a better understanding of what motivates them to implement CSR activities. This research project has not included participant observations as the circumstances made them impossible to perform.
9 1.5 Outline
Figure 1 presents an outline of this research in order to give an overview of the research: Chapter 1 – Introduction: The chapter presents a background for this research and an explanation of why it is conducted. The section also includes; purpose and research questions, scope and delimitations, and an outline of the report.
Chapter 2 – Theoretical Framework: The chapter presents our theoretical framework and is used as a frame of reference to the analysis and discussion.
Chapter 3 – Research Methodology: The chapter describes the research methodology and an evaluation of the research quality.
Chapter 4 – Empirical findings and Analysis: The chapter presents the empirical data and an analysis of the empirical data and the theoretical framework.
Chapter 5 – Discussion and Conclusion: The chapter presents present the discussion and conclusions of the research questions.
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2
Theoretical Framework
This chapter presents the theoretical framework, which includes information from peer-reviewed scientific articles. This chapter is divided into separate paragraph to create a scientific foundation of knowledge to be able to answer the research questions.
Corporate Social Responsibility Definition
CSR is a term that has been widely discussed in many industries throughout the decades. As a result of this, CSR does not have one clear definition, but is defined as an umbrella term with overlapping definitions and concepts (Lunheim, 2003). Notwithstanding, there are more common apprehensions of the term CSR as an embracing concept relating to stakeholder relations, environmental concerns, and supply chain management (Ortiz-Avram et al., 2018). Mallenbaker (2004) finds that CSR is about the overall positive impact on society resulting from the companies’ business processes. Valand and Heide (2005) explain the concept a little further by stating that CSR is about voluntarily taking socially responsible action beyond requirements enforced by laws and regulations. Jenkins (2009, p. 22) finds that CSR “relates to the activities of businesses, particularly in terms of their contribution to achieving economic, social and environmental sustainability”. As mentioned, CSR is generally about the voluntary actions initiated by firms approaching social and environmental concerns into their day-to-day operations and long-term goals (Malik, 2015).
The previous definition of CSR stated by the European Commission is “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis” (European Commission, 2011, p. 3). However, in this research project, the discussion is developed by following the European Commission’s (2011, p. 6) most recent definition of CSR, “the responsibility of enterprises for their impacts on society”. In order to be able to meet this responsibility, the European Commission (2011, p.6) states that:
“Respect for applicable legislation, and for collective agreements between social partners, is a prerequisite for meeting that responsibility. To fully meet their corporate social responsibility, enterprises should have in place a process to 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:
- maximizing the creation of shared value for their owners/shareholders and for their other stakeholders and society at large;
11 Motivation behind CSR implementation in SMEs
There are a lot of different themes and approaches found in the literature when looking at driving and motivational factors for implementing CSR work in SMEs. There is a difficulty for CSR to define and understand the concept of CSR on a general term, but companies can often define CSR in accordance with their own company (Jenkins, 2006; Jenkins 2009). There are several benefits linked to CSR, e.g., cost savings, more significant market access, broader social benefits in terms of education and community, and especially for SMEs, innovation, and productivity (Perrini, 2006). CSR is seen as an “all-embracing” idea in terms of stakeholders and is urging to have a positive impact on a broader range, but also seeking to gain a better attentiveness when it comes to the action and implications of businesses (Jenkins 2009). In Sweden, often due to rules and legislation, CSR initiatives by SMEs are often seeking driven rather than profit-sacrificing (Lee et al., 2016). Williamson et al. (2006) also find that regulations from, e.g., the government, is a driver for engaging in CSR when there is no clear advantage or resulting benefits from engaging in CSR activities. Reyes-Rodríguez et al. (2016) conclude that CSR is used by SMEs when pursuing to increase their competitive advantage. Another positive outcome of adopting a CSR strategy is “increased employee productivity, enhanced brand value and corporate reputation, and increased regulatory support, carry over into future periods” (Luo & Bhattacharya, 2009). That means that CSR has a short-term as well as a long-term effect on firm value (Husted, 2005).
A benefit of implementing CSR in SMEs is a competitive advantage, but when wanting to pursue this, it comes with its advantages and disadvantaging experiences (Jenkins, 2009). Knudsen (2011) mentions a disadvantage in terms of lack of economic resources as a general issue for SMEs to achieve reporting and documentation of their CSR activities. Knudsen (2011) states that SME tends not to focus on CSR reporting and communicating concerning the public, but instead place effort on strengthening the relationships with stakeholders and communicate CSR initiatives towards them in the first place. However, SMEs do possess characteristics beneficial for reducing the limitations and recognize the opportunities resulting in CSR initiatives (Jenkins, 2009). First, SMEs are highly flexible in terms of adapting to changing market opportunities and being able to quickly respond to new market demands or changed market circumstances (Jenkins, 2009). The previous sentence indicates that they can act swiftly and therefore take advantage of the competitive market, adapting the necessary social and environmental values of the new products (Jenkins, 2009). That can also result in better approaches to CSR as they often are innovative and creative due to their high adaptability (Jenkins, 2009). Second, compared to MNCs, SMEs often have a better environment of communication and therefore have a better movement and understanding of the CSR values throughout the organization (Jenkins, 2009). Third, SMEs do not have as clear managerial structures within the companies compared to MNCs, allowing for improved employee involved issues like CSR initiatives (Jenkins, 2009).Fourth, implementing change and the effect will become evident faster in SMEs, especially those relating to characteristics of motivation or personal satisfaction (Jenkins, 2009).Last, the gap regarding difficulties in making CSR operational can be smaller in SMEs since the owner-manager has a closer relation to the day-to-day operation, making the gap easier to overcome (Jenkins, 2009).
12 However, there are disadvantages linked to the handling of CSR activities, and the main one being the lack of managerial resources resulting in activities being poorly handled (Jenkins, 2009). The profitability of the company is the highest motivational driver for an owner-manager, even though several factors are essential looking at successfulness and drivers of a company, e.g., prestige, autonomy, and fulfilment (Williamson et al., 2006). SMEs are often more initiative-based regarding managing their business, which means that they have a more non-systematic ad hoc basis (Grayson, 2004). Due to the differences comparing SMEs and MNCs, a formal introduction of a CSR strategy is often absent in SMEs’ management systems (Lee et al., 2016). To be able to have functioning CSR work throughout organizations, top-level management involvement and commitment, and having an internal champion is critical (Jenkins, 2009). In SMEs, this task is often occupied by the owner-manager, while in larger firms, this task is often given to an employee in the middle tier department (Jenkins, 2009). However, a common trend within the SME sector is that companies are often unaware of to what extent they engage in CSR and are often not aware of the fact they are pursuing CSR issues (Lee et al., 2016). That also leads to SMEs avoiding using the term CSR as they often do not identify actions and operations within the company as CSR initiatives, even though they are very much CSR related (Lee et al., 2016). SMEs tend to use different language when describing CSR relate initiatives and engagement within the companies (Lee et al., 2016). However, more CSR initiatives are implemented following the size of the SME; bigger SME often equals more CSR (Murillo & Lozano, 2006).
Responsibilities relating to social and environmental issues are becoming essential, and the majority of SME realize the importance of adapting effort towards these responsibilities (Jenkins, 2006). There is a more substantial realization of the competitive advantage that CSR initiatives can bring, and there is an increase among SMEs to engage in the CSR agenda (Jenkins, 2009; Reyes-Rodríguez et al., 2016). In Sweden, many companies do often engage in CSR practices (Lee et al., 2016). Some are aware of their CSR engagement, but many are unknowingly working with CSR activities (Lee et al., 2016). Regardless, CSR is often a complementary task to already existing business strategies rather than an independent CSR strategy (Lee et al., 2016). As SMEs are usually substantially smaller in size compared to larger firms, independent departments for SMEs are often absent, and CSR practices are instead embedded in the SMEs’ day-to-day operations (Lee et al., 2016). That often results in CSR issues and activities being approach and dealt with informally in Swedish SMEs’ daily life (Lee et al., 2016). Commitment to social activities in the form of devotion to communities and employee relations and improving brand value in terms of company image and reputation, is also a driving factor for SMEs to adopt CSR activities into the organizations (Jenkins, 2006). Malik (2015) states that companies performing CSR activities in a superior way often receive positive reinforcement from media and regulators, which ultimately will result in favourable reputation and an improvement to the companies’ brandings. Jenkins (2009) ascertains that social engagement can contribute to economic benefits and therefore motivate more SMEs to engage.
Jenkins (2006) states that the most critical and useful measurement of engaging SMEs in CSR it to educate them about the business benefits and about what can be gained through initiating CSR work in their companies, but also the important characteristics SMEs possess to achieve successful CSR. SMEs that have incorporated CSR work into their organization often have high-level employee awareness and particularly concerned with human rights issues resulting from globalization and supply chain
13 operations (Baumann-Pauly et al., 2013). The CSR work incorporated in an SME ought to have an informal approach and needs to be following the values of the firm and introduced step-by-step (Jenkins, 2006). Nevertheless, SMEs are responsible for CSR issues that also gain interests among SME employees, and they are closer to home. Safe and healthful work environment, encouraging diversity within the companies, involvement in and contributions to the nearby communities and societies, and working towards decreasing environmental damage, are all activities that SMEs are commonly working to tackle (Jenkins, 2009). However, in order for SMEs to attain a greater comprehension of CSR and understand how to incorporate it into core business practices best, and an integrated approach is required (Jenkins, 2006). Baumann-Pauly et al. (2013) found that CSR engagement is often a part of the organization’s culture rather than a part of a formal job description and even though CSR is a part of day-to-day operations, employee involvement is strong when forming the agendas.
2.2.1 Internal Drivers vs. External Pressure
When researching CSR in SMEs Jenkins (2006) found it common that it is not the external pressure from, e.g., legislation and customers that was the force to implement CSR activities into their operations, but rather an internal drive. That is also stated by Lee et al. (2016), who ascertain that internal motivator is more powerful compared to external motivators and the most common activities within SMEs are associated with internal activities such as social engagement and economic dimension. When looking at the financial aspects, “SMEs protect their core business, while large firms protect their brand image and reputation” (Jenkins, 2004, p. 96). Moreover, Jenkins (2004, p. 6) finds that “the overwhelming motivating factor for SMEs to engage in CSR is not external pressure but an internal drive to “doing the right thing” or “putting something back”’. However, there are several motives to engage in CSR activities, but an approach to work with CSR activities is often to achieve specific business goals (Ellen et al., 2006). Although, according to Lee et al. (2016), owner-managers in SMEs often have a different approach when looking at working with CSR activities and instead focus on `sticking to business´. They also find that SME only works with CSR activities when they can recognize benefits for the business and measure results such as an increase in firm value (Lee et al., 2016).
The role of managerial values in relation to CSR
Characteristics such as size and resources are not initial drivers for the implementation of CSR, but rather an industry, inclusion in global supply chains, and owner-managers’ motivation (Baumann-Pauly et al., 2013). CSR implementations are often implemented as a result of the owner-manager initiatives and are often based on their values and interest (Lee et al., 2016). Lee et al. (2016, p. 97) state that “the ‘who’ behind CSR decisions is principally the SME’s owner,” and the situation is often the same in Sweden. Jenkins (2006) found that obvious business benefits are resulting from the implementation of CSR, but this is, however, not the primary motivation for engaging in CSR activities. A more exceptional motivational driver is moral values and something that would benefit companies and their stakeholders (Jenkins, 2006). In order for CSR to be implemented successfully, top management needs to introduce CSR strategically (Baumgartner, 2014). One commonly mentioned aspect in the literature is that CSR activities and their implementation belongs to the role of managerial support and decisions (Oritz-Avram et al., 2018). Lee et al. (2016) and Baumann-Pauly et al. (2013) finds that values from owner-manager are a primary driver
14 when it comes to working with CSR activities. It is the decisions of individual managers that influence the moral environment and the management of the firm (Aragón et al., 2016). However, they are not the “sole driver” for decisions taken regarding values, interests, and priorities, e.g., CSR initiatives (Aragón et al., 2016). Chin et al. (2013) also state that the implantation of CSR requires that managers are interested in and committed to the process in order for it to be successful. That is also strengthened by Jenkins (2006, p. 250) that states that “in order for CSR to work in a company, it must have an internal champion; top-level management commitment is crucial to its success”.
The literature often states that a firm’s owner-manager or dedicated CSR champions is a key driver for the implementation of CSR and it is the personal values and principles of the owner-manager that heavily influence how and why they decide to work with CSR in the first place (Jenkins, 2006; Oritz-Avram et al., 2018). Jenkins (2006) finds that a successful implementation of CSR is mainly due to the “championing by a few managers,” which is, in the majority of times, the actual owner-manager. Jenkins (2006) also finds that translating principles and vision into becoming adaptable in position to SMEs’ CSR activities is the owner-manager’s responsibility. Jenkins (2006, p. 251) exemplifies this by explaining that “the principle ‘‘respect and value our colleagues’’ in CSR translates into improving the work-life balance of employees or providing excellent training and development opportunities”. When looking at the SMEs and the implementation and driver of values, the owner-manager is responsible (Jenkins, 2006), and managerial discretion is a way for owner-managers to express their personal values (Hemingway & Maclagan, 2004).
CSR engagement
Essential to underline is that SMEs differ from MNCs. The CSR activities in SMEs and MNCs fundamentally differ the nature, practices, and degree but also, as stated by Coppa and Sriramesh (2013), in resources available, managerial values, strategies, and level of involvement. Additionally, Baumann-Pauly et al. (2013) discuss that engagement in CSR activities in SMEs depend on the personal motivation of the owner-manager, the industry, and the integration in the global supply chain, and not on size and resources.
Even though the size is a factor and often the main characteristic explaining the behaviours of SMEs, there are external and internal factors that influence the behaviour of SMEs (Jenkins, 2004). One common understanding when talking about SMEs is that there is no apparent disjunction between different ownership and managerial roles, hence having a more personalized management style (Burns, 2016). Also, the companies’ values are often based on the “owner-manager’s” values resulting in the SME sector consisting of very personalized ownership structures (Jenkins, 2009; Baumann-Pauly et al., 2013; Oritz-Avram et al., 2018). As managers within SMEs often have multitasked positions, having to deal with many different business tasks at the same time, the possibility of working proactively with tasks beyond the day-to-day operations is often difficult (Tilley, 2000). Nevertheless, due to SMEs’ main characteristic being size, it allows for high flexibility in terms of adapting to changing market opportunities and being able to quickly respond to new market demands or changed market circumstances (Jenkins, 2006; Baumann-Pauly et al., 2013). That means that they can act promptly and therefore take advantage of the competitive
15 market, adapting the necessary social and environmental values of the new products (Jenkins, 2006).
A result of the growing pace of globalization and the visibility of larger firms is a greater pressure or need for better transparency and accountability (Jenkins, 2009). However, SMEs are still in the background of this not having the same demands and remain invisible, not linking CSR to brand image and reputation as the larger firms (Jenkins, 2009; Lee et al., 2016). Even though CSR in SME has an important and central role in the daily operations of a company, the urge to communicate the CSR work externally is often avoided or limited to, e.g., social media or a homepage (Lee et al., 2016). That is one significant difference when comparing CSR in large firms and SMEs (Lee et al., 2016). The reason why SMEs tend not to communicate their CSR activities externally is due to the simple reason of not feeling comfortable with the idea (Jenkins, 2009). They believe that engagement in CSR activities is due to moral reasons, not something to exploit by `boasting´ about it (Jenkins, 2009). Many SMEs have stated that they believe that why so many large firms choose to communities their CSR work is to promote the companies making it mainly a public relation (PR) stunt (Jenkins, 2009). However, many firms choose to communicate their CSR activities in order to promote the benefits and hope to influence other firms to pursue the same initiative (Jenkins, 2009). This approach to communicating CSR is a new approach to how to engage SMEs to do the same (Jenkins, 2009).
2.4.1 Social Responsibility
Social commitment is not related to firm age or ownership type but strongly associated with the industry (Panwar et al., 2017). Furthermore, financial recourses also have a significant impact on SMEs’ social engagement but only affect social engagement independently and do not result in an interactive effect (Panwar et al., 2017).
When SMEs are involved in nearby communities and societies, it is often due to real concern regarding their well-being and aims to contribute to positive changes (Fitzgerald et al., 2010). This kind of social engagement is often based on the values of the owner-manager and is often informal and personal and tends to mirror the needs of the community (Aragón et al., 2016). Oritz-Avram et al. (2018, p. 259) find that “CSR tends to have a regional focus and serves to strengthen the community”. That is often deriving in company history and close relation to nearby communities over a long period of time, and the socially responsible activities are based on the interest of the communities and their primary stakeholders (Ahmad & Ramayah, 2012). In SMEs, relevant decisions making, e.g., resource allocation for socially responsible activities, depend on the owner-managers’ assessment and their values, choices, attitudes, and characteristics, as they are the “change agents” and decision-makers (Jenkins, 2006; Murillo & Lozano, 2006; Jenkins, 2004). It is these values of the owner-managers’ that are the first factor that can influence the behaviour of social responsibility in SMEs (Preuss & Perschke, 2010).
Trust is often generated through owner-managers’ values, priorities, and economic environment (Lepoutre & Heene, 2006). Oritz-Avram et al. (2018, p. 259) state that “the extent and depth of an SME’s implementation of CSR measures will depend on the owner-manager’s awareness of the costs of irresponsibility as well as of the benefits of responsible behaviour”. The owner-manager’s expertise, education (Cambra‐Fierro
16 & Ruiz-Benítez, 2011), and limitation of attention can influence this awareness (De Clercq et al., 2015).
2.4.2 Stakeholders and Shareholders
According to McWilliams and Seigel (2001), one primary concern for management is the maximization of shareholder value, and Malik (2015) states the common goal for the majority of firms is to maximize firm value and to achieve this goal effective CSR programs are needed. Malik (2015) also finds that in order to maximize shareholder value and firm value through the protection of stakeholders’ interest, CSR is a useful strategic tool. Implementing CSR generates different benefits increasing firm value (Malik, 2015). Depending on the structure and goals of the CSR programs adopted by firms, these benefits can be “capital market advantages, improved operating efficiency, product-market benefits, regulatory favours, and improved employee productivity” (Malik, 2015, p. 420). CSR is also a useful tool to use when SMEs aims at enhancing efficiency and reduce cost (Jenkins, 2009), but also want to generate trust with their internal stakeholders (Perrini, 2006). CSR is also effective to use in order to progress long-term survival and business performance (Williamson et al., 2006). Furthermore, Hung (2011) finds that in order for firms to realize the vitality and necessity to implement CSR practices successfully, more emphasis on concerns organizations have towards their stakeholders is necessary.
Additionally, another key stakeholder is the employees of a firm (Jenkins, 2009). CSR is an efficient tool for SMEs to utilize in order to influence better-performing employees to stay with the company, but also to employ competent employees (Branco & Rodrigues, 2006). The attraction of good employees is basically due to advantageous CSR performance, which can lead to improved benefits for the employees and also increase the overall morale within the firms (Jenkins, 2009). Moreover, CSR can also lead to firms `going the extra mile´ which means that they offer more than demands from unions and regulator demand, e.g., health care, retirement benefits, wagers, and this will ultimately result in increased employee productivity (Malik, 2015). Baumann-Pauly et al. (2013) and Dias et al. (2019) importantly states that compared to MNCs, SMEs are not necessarily worse at implementing CSR practices. They can instead be superior in the implementation of CSR related practices into their organizations, involving internal processes and engaging employees throughout all departments (Baumann-Pauly et al.,2013; Dias et al., 2019).
However, SMEs are not often influenced by stakeholders to the same extent as MNCs, but they are influenced to implement CSR work due to their characteristics of being flexible and adaptable, but also due to their internal management structures (Jenkins, 2009). Implementing CSR strategies is a beneficial tool of conveying the `good doing´ of the firm to different stakeholders and also to enhance the overall credibility of the firm (Malik, 2015). Moreover, Freeman (2010) talks about several areas in which social engagement help to “address, balance, coordinate, and prioritize multiple stakeholder demands, all of which help it become more efficient in adapting to external demands, and thereby financially be more successful”.
2.4.3 Environmental Performance
Nowadays, organizations seek to become competitive by product differentiation and globalization but also aim to enhance positive values and their social and environmental performance (Hagen, 2009). That is often achieved through thorough strategic implementations, which increases the firms’ branding and image (Hagen, 2009). A
17 driver that is gaining more and more attention today is the concern for the environment. SMEs, often within the manufacturing industry, tend to work with CSR activities related to environmental improvements, e.g., to decrease their environmental impact, as it is of growing concern and is getting more attention from stakeholders (Williamson et al., 2006). Jo and Harjoto (2011) find that a firm’s CSR activities related to environmental performance result in better financial performance for the firm. Furthermore, when adapting activities of environmental sustainability strategies, it is the founding owner that strongly influences the foundation of these strategies and the aim of the implementation, and it is often an aim to “remain well-positioned in the market” (Murillo & Lozano, 2006, p. 237).
Engaging in activities of environmental concerns is, according to Williamson et al. (2006), a driver when firms have something to gain from it. There are often reasons behind decisions regarding values and attitudes (Williamson et al., 2006). According to a study by Williamson et al. (2006), manufacturing SMEs often respond to stakeholders’ and mainly the key customers’ demands regarding environmental initiatives. They also found that it is mainly three sets of values that have the most significant influence over the decision-making process: “identifying cost savings and responding to cost pressures”, “responding to the supply chain” and “responding to regulation” (Williamson et al., 2006, p. 322). They also found that companies within the manufacturing industry seldom engaged in voluntary action regarding CSR activates and often did no more than what was demanded by regulators (Williamson et al., 2006). Thus, firms are “driven by `business performance´ motives, but that a higher level of environmental activity is driven by `regulation´’” (Williamson et al., 2006, p. 324).
CSR Activities
Table 1 provides a set of CSR activities relevant to this research paper and is based on a table by Jenkins (2006). The activities are grouped into four main categories: environmental, employees, supply chain/business to business, and community/society.
18 Table 1: CSR activities adapted from Jenkins (2006)
Category CSR activity Description Source
En v iro n m en ta l
ISO14001 An internationally accepted standard that specifies the requirement for an effective environmental
management system. (Jenkins, 2006), (Murillo & Lozano 2006), (Perrini, 2006)
Waste minimization, re-use, and
recycling schemes Engagement in programs with the intention to reduce waste, re-use and recycle materials.
(Jenkins, 2006), (Panwar et al., 2017), (Perrini, 2006)
Reduction in the use of harmful
chemicals Use of harmful chemicals is reduced in the organization's operations.
(Jenkins, 2006), (Malik, 2015), (Perrini, 2006)
Reduction in atmospheric emissions Atmospheric emissions are reduced through e.g., renewable energy sources. (Jenkins, 2006), (Malik, 2015), (Perrini, 2006)
Use energy from renewable sources Use energy from renewable sources with no associated air pollution (Jenkins, 2006), (Perrini, 2006) Membership of environmental
organizations Memberships in organizations working with protection of the environment.
(Jenkins, 2006), (Murillo & Lozano, 2006), (Malik, 2015) Investment in new technology Investment in new technology and structure in order to benefit from efficiency. (Jenkins, 2006)
Environmental reporting Communication of environmental performance information to the organization's stakeholders.
(Jenkins, 2006)
Energy-saving programs Engagement in programs to reduce energy usage in operations. (Malik, 2015)
Environmental audits Evaluation of organizations’ operations' effect on environment intended to identify environmental
compliance and management system implementation gaps, along with related corrective actions. (Perrini, 2006)
Em p lo y ee s
Information sharing amongst
employees Employees are provided with information about organizational
(Jenkins, 2006), (Murillo & Lozano, 2006)
Ensure and promote occupational
health and safety Employees are provided with a safe and secured work environment
(Murillo & Lozano, 2006), (Malik, 2015), (Perrini, 2006) Training and development programs
for employees Training and development programs are provided to the employees
(Jenkins, 2006), (Perrini, 2006), (Malik, 2015), (Murillo & Lozano, 2006)
Employee equality and diversity Employees are treated in an equal manner undependably on gender, nationality, etc.
(Jenkins, 2006), (Panwar et al., 2017), (Murillo & Lozano, 2006), (Malik, 2015) Employee benefits Employees are provided with non-wage compensation in addition to their normal wages or salaries,
e.g., wellness grant, flexible worktimes, etc.
(Jenkins, 2006), (Panwar et al., 2017), (Malik, 2015), (Perrini, 2006), (Murillo & Lozano, 2006) Taking employees interest into
account for decision making Employees interest and knowledge are taken into account when decisions are made in the organization
19 Table 1: continue
Category CSR activity Description Source
Su pp ly cha in/ bu sine ss t o bu sines s
Information sharing within the
supply chain Information is shared within the supply chain in order to increase transparency. (Jenkins, 2006),
Take part in industry best practice
programs Engage in industry best practice, e.g., lean production. (Jenkins, 2006)
Supply chain relationship
development Development of sustainable business relationships in the supply chain. (Jenkins, 2006)
Product development Continuous product development processes in order to develop business operations. (Malik, 2015)
Improve brand image Work for reputation and brand building (Malik, 2015, (Panwar et al.,
2017)
Improve reporting quality Continuous improvement of reporting CSR engagement and initiatives (Malik, 2015)
Ensure better governance Ensure efficiency and accountability of the firm (Malik, 2015)
Promote corporate ethics Promote CSR activities to other actors in the supply chain (Malik, 2015)
Customer service quality programs Engagement in customer service as well as the development of the service to ensure good customer relationships
(Perrini, 2006), (Malik, 2015), (Panwar et al., 2017)
Sourcing policies Requirements of certain CSR activities by suppliers (Perrini, 2006)
ISO9001 An internationally accepted quality management system of standards that helps organizations ensure they meet customer needs within regulatory requirements related to a product or service
(Jenkins, 2006), (Murillo & Lozano, 2006) Co mm un it y /So ciet
y Donation of profits to charity The company donates parts of profit to charity (Jenkins, 2006), (Malik, 2015)
Support local sport and cultural
activities Sponsorships to local sports teams and cultural activities (Jenkins, 2006), (Perrini, 2006)
Social auditing A process for evaluating and improving the organization's performance and behaviour and its effects on
society. (Jenkins, 2006)
Work experience placements Employee placement to educate and develop understanding of other occupations (Jenkins, 2006)
Local community involvement Involvement in the nearby community (Perrini, 2006), (Panwar et al.,
20
3
Research Methodology
The following chapter will present the research approach and the methodical selections for this research project. This chapter will include the following parts: research philosophy and approach, research process, the connection between research questions and method, data collection, data analysis, research quality, and sampling method.
Figure 2: Model of the research approach. (Based on Saunders et al., 2016).
Research Philosophy and Approach
According to Brinkmann and Kvale (2016), it is vital for researchers to justify their research design and method with good reasons. Interpretivism (figure 2) was the philosophical approach adopted in this research paper. The choice of adopting an interpretive philosophy was based on the fact that it is favourably relevant when conducting a study researching organizational behaviour (Saunders et al., 2016). SMEs are often unique as they are created and operating according to certain situations and opinions of specific individuals (Saunders et al., 2016). An interpretive approach was relevant for this research as it allows the researcher to focus on a situation, i.e., CSR in an SME, and to interpret the situation motivated by actors to this purpose of this research paper (Saunders et al., 2016).
Induction is about researching several instances in order to be able to gain a general perspective of the specific research area (Brinkmann & Kvale, 2016). An inductive research approach is said to be more appropriate when dealing with a small number of cases, as well as the context in which they exist (Saunders et al., 2016). A deductive research approach is about to presuppose a testable hypothesis from existing theories and, thereafter, design a research approach to test the hypothesis (Brinkmann & Kvale, 2016). An abductive approach combines induction and deduction and begins with observing a `surprising fact´ (Saunders et al., 2016). Brinkmann and Kvale (2016) state that abductive reasoning is adapted if there is a situation of `uncertainty´. An abductive approach involves collection data sufficient enough to be able to study the situation and identify and explain themes and patterns (Saunders et al., 2016). The inductive element
21 of this research is that it adds to existing research. This research is abductive as it incorporates deductive features such as it includes old research. Therefore, an abductive research approach was appropriate for this research project (figure 2).
Qualitative analysis is non-statistical techniques applied to research investigating meanings and relationships using, e.g., interviews, to collect non-numerical data (Saunders et al., 2016). Using qualitative methodology allows for non-standardized data collection so that “questions and procedures may alter and emerge during a research process that is both naturalistic and interactive” (Saunders et al., 2016, p. 181). Therefore, a qualitative analysis (figure 2) was chosen for the methodological choice for this research.
A cross-sectional time horizon (figure 2) was selected for this research as this allows for a situation to be studied at a particular time (Saunders et al., 2016). A cross-sectional time horizon was also relevant for the time frame for this research paper and when the method for data collection is, e.g., interviews (Saunders et al., 2016). Additionally, when researching an organization, there can be one or several units of analysis (Saunders et al., 2016). In this research paper, the unit of analysis was the set of CSR activities within the SME, and further analysis was applied by approaching research questions: “why”, “how” and “what”.
3.2 Research Design
This research project aims to generate a broader understanding of CSR initiatives in manufacturing SMEs. Yin (2018) states that if research questions are of an explanatory nature, e.g., questions regarding “how” and “why” or if seeking to investigate something in-depth, case study research is highly relevant. The most suitable research strategy for this research project is, therefore, case study research as it allows for investigation of CSR in a real-life context, in an exploratory purpose (Yin, 2018). Additionally, this research project is a single case study based on one company. The choice was motivated as the single case company gave pleasant amount of input for the purpose of this research project.
3.2.1 Case Company
This research was performed in collaboration with the company Ragnars. Ragnars was founded in Forserum outside of Jönköping, Sweden, in the 1950s and was, in the beginning, a manufacturing company with a niche for fittings in wood-based materials as a sub-contractor (Ragnars, n.d.). Ragnar consists of 40 employees and has a turnover of 9 million euros (Ragnars, n.d.). Ragnars, as the brand it is today, was first established in 2001 when the company launched its new product-series (Ragnars, n.d.). Today the company develops ideas and products in close collaborations with their architects and designers and are combining traditional craftsmanship with the latest technology (Ragnars, n.d.). Ragnars is certified with the quality certificate ISO 9001:2008, the environmental certificate ISO 14001:2004, and the Eco label the Swan Nordic-Ecolabel (Ragnars, n.d.).
22
3.2.2 Sampling method
The case company Ragnars was chosen based on the sampling method suitable for this study which is a non-probability sampling design. The sampling design was chosen due to non-probability design being a suitable method for case study research as it includes a lot of different sampling methods (Saunders et al., 2016). Due to the variety of sampling methods, this was appropriate in order to find a sampling method best adapted for this research project. One method included in non-probability sampling is purposive sampling, which allows researchers to select the samples following the purpose and research questions (Saunders et al., 2016).
The purposive sampling design of this thesis was based on the following five criteria: Criteria 1: Small- to Medium-sized company (SME)
Criteria 2: The company has to have a CSR agenda Criteria 3: The company has to be founded in Sweden
Criteria 4: The person(s) has to have a relevant position regarding the CSR activities within the firm.
Criteria 5: The firm has to be a manufacturing company.
Following the selection criteria, one company was identified and chosen for this research and which was Ragnars.
Table 2: List over case company criteria
3.3 Data collection
3.3.1 Interviews
Semi-structured interviews are non-standardized, where the interviewer focus on covering key themes and suggestion of questions often adapted to the specific interview (Brinkmann & Kvale, 2016; Saunders et al., 2016). The aim of a semi-structured interview is to understand the interviewees’ perspectives (Brinkman & Kvale, 2016) as they can describe and reflect on their responses (Saunders et al., 2016). Semi-structured interviews are highly appropriate when the research has an interpretive philosophy and seek to understand the context and meaning of the intended research area (Saunders et al., 2016). That results in a choice of qualitative interviewing in order to obtain subjective and objective in-depth information and understanding through the interaction with the interviewees. A semi-structured interview was used in the research project to collect primary data, and different themes and critical questions were targeted to generate more informative knowledge relevant for this research project. The interview
23 was conducted with both participants present as it was asked for by the participants in order to cover possible flaws and missing out on important information.
In the preparation phase of conducting the interview, key questions targeting the research questions were designed (Appendix 1 & 2). The interview was conducted for approximately 60 minutes via an online application and was executed similarly to a conversation rather than an interrogation, including open-ended questions encouraging open-ended answers. The interviewees were informed of the three research questions and were also asked additional key probing questions covering the three research questions individually. The interview was also recorded to enable the interviewers to listen back to the interview and to able to transcribe the information given during the interview.
3.3.2 Document studies
Secondary data collection in the form of document data was conducted to obtain complementary data to the conducted interviews. The collection of primary data can often lead to the realization of secondary data, e.g., document evidence (Yin, 2018). Document data is valuable when a researcher wants to generate insight and description regarding an organization’s real-life situation (Saunders et al., 2012) and is often seen as relevant when conducting case study research (Yin, 2018). The document data included in this report was the company’s Code of Conduct; this can be referred to as secondary data (Yin, 2018). Secondary data collection in the form of document data was conducted to obtain complementary data to the conducted interviews.
3.4 Data analysis
The process of the data analysis performed for this research project is illustrated in figure 5. The first initial step of this research project is to conduct a literature review and simultaneously identify and create an understanding of existing gaps enabling the development of the research purpose. The next step resulting from the collection of new knowledge is to identify a problem, purpose, and research questions. When the research problem and purpose are identified, relevant peer-reviewed articles were selected and included in our theoretical background.
Furthermore, figure 5 additionally illustrates the outline of the case study; it was conducted through an interview and document studies. The primary data for the collection of data of the case study was through the conduction of an interview. A document study was used as secondary data to complement the primary data from the interview.
The interviewers afterward transcribed the interview that was conducted. Both researchers were participating in the transcription in order to not miss out on vital information from the interview. The procedure was chosen as it helps to properly analyse the data (Saunders et al., 2016). Once the data was collected and transcribed, it was analysed thematically by identifying key themes in the data. As the data signifies the inductive part of this study, the analysis was based on the general inductive approach described by Thomas (2006
The general inductive approach is based upon multiple readings of the data, which was done by both researchers. Henceforth, key themes were identified in the data collected
24 from both the interview and Code of Conduct by discussions of interpretations of the information from the collected data. The purpose of identifying key themes is to make the data relevant for the purpose comprehensible for further analysis (Saunders et al., 2016) and to create meaning of complex data through the construction of themes and categories for the data (Thomas, 2006). This was done in accordance with the developed research questions for the study: motive behind CSR implementation, how CSR is conducted, and what CSR activities does the company perform.
Figure 3: Data Analysis
3.5 Research quality
3.5.1 Ethics
A research project is associated with a range of ethical issues in all the different stages of the project (Saunders et al., 2016). One of the criteria which affects this research mentioned by Saunders et al. (2016) is to respect the rights of participants in the interviews. Participants do, regardless of stage in the research process, have the right to withdraw. They are also appraised with the purpose of the research.
Another general principle in terms of ethics is the maintenance of objectivity during the research (Saunders et al., 2016). Maintenance of the objectivity during the research refers to accuracy when collecting the data, which relates to the validity and reliability of the study (Saunders et al., 2016).
3.5.2 Validity
Validity refers to the level of suitability of the chosen research method as well as the accuracy of the results being presented and the ability to generalize the findings (Saunders et al., 2016). Validity is also about confirming and investigating what is intends to be investigated (Brinkmann & Kvale, 2016).
25 When looking at validity concerning interviews, one concern is that results will differ if different interviewers conduct the interviews (Brinkmann & Kvale, 2016). By using more than one researcher when conducting interviews, there is a possibility to be able to evaluate the findings and whether the researchers agree or not and thereby eliminate the possibility to include individual subjective views into the result (Saunders et al., 2016). Using more than one researcher does thereby increase the research project’s validity. Participant bias, i.e., a biased answer from the interviewee due to the interview location (Saunders et al., 2016), was avoided since the interview was performed via Microsoft Teams. Researcher error, i.e., misinterpretation of data due to not being prepared or tiredness of the interviewer (Saunders et al., 2016), was avoided through thorough planning. Furthermore, researcher bias, i.e., subjective interpretation by the interviewer (Saunders et al., 2016), was also avoided by confirming interpretations during the interview. This was done during the interview, where interpretations by interviewers of answers was checked and confirmed by the interviewees.
External validity refers to if the research findings can be generalizable in other settings or groups (Saunders et al., 2016). Saunders et al. (2016) state that the generalizability of findings is often of great importance in research and samples are selected with great care in order the be able to apply the finding in other contexts. For this research, it was relevant to identify statistical generalizability and theoretical generalizability. Statistical generalizability concerns research finding generalizability on an entire population. On the other hand, theoretical generalizability means that the theoretical findings of the research can be generalized in similar research situations (Saunders et al., 2016).
3.5.3 Reliability
According to Saunders et al. (2016, p. 202), “reliability refers to the replication and coherency”. If a researcher can replicate an earlier research design and achieve the same findings, then that research would be seen as reliable (Saunders et al., 2016). Making explicit procedures is one way of attaining higher reliability that will result in minimized bias and errors of the study (Yin, 2018). In order to achieve this aspect of reliability, every procedure has been described in a detailed manner.
Reliability in terms of interviews is that the result might be considered invalid as the answers provided by the interviewees might be false (Brinkmann & Kvale, 2016). In order to increase the validity of this research project, clear instructions were given to the interviewees as well as a thorough introduction about this research and their part in it. Furthermore, peer-reviewed articles are written and reviewed by experts and was used in this research project to ensure the reliability of the theoretical background. Scientific journals with a high index are another way of ensuring that the literature in the theoretical background is of higher standards.
26 3.6 Research process
Figure 4: The research process
“A good guideline for doing case studies is, therefore, to conduct research so that auditors could in principle repeat the procedure and hopefully arrive at the same results” (Yin, 2018, p. 46). In figure 3, the timeline of the research process is visualized, presenting the essential steps in this research. The initial step was identifying the problem of investigation and conclude the problem formulation. Identification was achieved partially through the literature review identifying gaps in previous research. The literature review was also a lengthy process as this research required an extensive literature search and a thorough understanding of the topic chosen. The methodology was concluded at the same time as the literature reviews in order to attain a robust theoretical framework. The techniques for collecting the empirical data, i.e., interview and document studies, allowed for the case study to be carried out during a cross-section period. Finally, the step of writing the report was a simultaneous process throughout the entire period of this research project.
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4
Empirical findings and Analysis
The following section presents data collected from the interview conducted at Ragnars as well as data from documents. The section will also present an analysis of the findings in relation to the theories presented in the section theoretical background.
4.1 Findings
The first time Ragnars implemented CSR activities into their business was 2011. Back then, the implementation was demanded by some of the big customers, according to the CEO. In order to persuade the customer to remain with the company, they had to comply with certain restrictions regarding CSR. As stated in their Code of Conduct, Ragnars “comply with existing laws, regulations and requirements”, which is a requirement for long-term survival. According to the respondents, they can also recognize a greater awareness of the effect manufacturing processes have on different stakeholders as it is becoming more common for these kinds of requirements on the manufacturers. The respondents continued that they forecast an even more significant increase in these questions in the future.
In the Code of Conduct, the company states its ambition to go even further and be one step ahead of the laws by action. The respondents state that this has to do with the realization of how closely connected related socially responsible behaviour is with a competitive advantage and that it can be combined with a better economy. By implementing CSR activities, the company can differentiate themselves from their competitors:
“We are competing with companies in low-wage countries. CSR activities can help us differentiate from our competitors and maybe even be our most important competitive advantage in the future. It is the reality we are facing, where it is all about finding the way to increase the competitive advantage and create a viable company for the future.”
28 Table 3: Ragnars Code of Conduct
Relations
Group Dynamics We are humans with different talents and strengths that strive for a bigger entity than the sum of its parts, 1+1=3
Sustainability Management and co-worker's vision are to pass on a healthy and sustainable community to future generations. Ragnars is developed in a direction that protects the climate and the environment.
Honesty and Humidity
We associate with people in a respectful manner. We comply with laws and regulations, and we keep our promises. We comply with existing laws, regulations, and requirements. The ambition is to be one step ahead of the law by actions. Objective facts should form the base for decisions. Ragnars follow FN Global Compact's Ten Principles and is certified according to ISO 9001:2015 and ISO 14001:2015. Many of Ragnars products are certified with Möbelfakta and Nordic Swan Ecolabel.
Customers, Architects, and Suppliers
We are building and care for relations by open and honest communication with customers, architects, and suppliers. Ragnars prioritize and support the local community's
development by mainly choose local suppliers. Most of our suppliers exist within 100 kilometres radius. Transportation (with Euro 6 engines) is minimized, which facilitates our close collaborations.
Employees Employees shall have the ability to influence, personal development, and meaningful tasks. Recruitment for vacant positions is firstly made through internal recruitment. We work to make employees feel healthy, enthusiastic, and harmonious. All employees with the same experience and qualifications should receive equal pay for equal work when the workload is comparable. The wage trend is based, as much as possible, on objective facts regarding core competencies such as experience, quality, efficiency, level of competence, enthusiasm, and team spirit. We work systematically to make all employees understand and share our core values.
Creativity
Customization For Ragnars customization is a possibility for us to grow together with architect and customer. Therefore, we welcome new ideas about customization regarding material and construction.
Innovation Ragnars work systematically to try more ideas together with all our employees,
customers, architects, suppliers, collaborators, and other important stakeholders. The best ideas are realized in an innovative way.
Innovative products with an artistic touch
Our focus is on innovative designs that are uncompromisingly realized in our plant in Forserum. Ragnars.Work; in-house design and function
Competitiveness
Sustainability We offer our customers a sustainable business model that simultaneously creates economic and social value. Sustainability is an investment that reduces exposure to risks that leads to new businesses by improved customer relations. Our goal is to be energy-autarkic in terms of electricity, which is environmentally and economically beneficial. We accept the challenge from the Swedish government that emphasizes sustainability requirements in procurement processes.
Competence creates a reasonable price level
Ragnars employees create knowledge and competence through our history an all future challenges presented by the architects. We do also offer a high technical level, which is created by a combination of Industry 4.0 and craftmanship. Reasonable pricing levels, timeless design, and long lifespan for our products make them beneficial for our customer from an economic point of view.
When looking at how Ragnars work with CSR, the CEO stated that it is a question of remaining viable in the market or not – “either you obey the rules, or you do not”, and the rules can derive from different actors, either from authority or from the market. He states that actors at the market are asking for more CSR activities, and if the company should survive, they also need to adapt to the demand. The first time CSR was implemented into Ragnars was 2011. Back then, it was a requisite from one of the big customers and, it was for them a necessity to implement specific activities into their business in order to secure long-term survival due to the demand from customers.
