Corporate Social Responsibility: A study of Swedish Organizations and Companies operating in China

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Corporate Social Responsibility

A study of Swedish Organizations and Companies operating in China

Authors: Emelie Glaser

Human Resource Management

Frida Eskilsson

Human Resource Management

Tutor: Kjell Arvidsson

Examiner: Mikael Lundgren

Subject: Business Administration III

Level and semester: Bachelor thesis, spring 2013

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Acknowledgements

The main part of this thesis was written during our stay in Shanghai, China in the spring of 2013. The study is an academic Bachelor thesis at Linnaeus University in the field of Business administration. The project was made possible thanks to a Minor Field Study (MFS) grant from the Swedish International Development Cooperation Agency (SIDA). An MFS study considers issues regarding development in developing countries, where China is defined as one. Additionally, the study has been assigned one more scholarship from Vision, a Swedish union organization which supports studies regarding labor rights with international

scholarships.

Aside from SIDA and Vision, we would like to thank the respondents who took their time to meet us for interviews. We would also like to thank our tutor Kjell Arvidsson and our examiner Mikael Lundgren for valuable advice and comments.

Kalmar, 29 maj 2013

Emelie Glaser Frida Eskilsson

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Abstract

Bachelor Thesis School of Business and Economics, Linnaeus University, Business Administation, Spring 2013

Authors: Emelie Glaser and Frida Eskilsson Subject: Business Administration III

Tutor: Kjell Arvidsson Examiner: Mikael Lundgren

Title: Corporate Social Responsibility - A study of Swedish Organizations and Companies operating in China

Problem: China has grown and is still growing toward becoming one of the world’s leading economies but in the shadow of this rapid advancement, the country has had to make

sacrifices regarding the environment and people’s health, safety and well-being at their work places. The social responsibility discussion is constantly being debated by companies and their representatives world-wide. Companies need to act responsibly in order for businesses to be competitive and remain successful in the global economy. Companies’ operations also have to be based on sustainable thinking and acting. We find that CSR can be used by companies as a strategy for working with social responsibility toward both employees and society. In 2007, an agreement between the Swedish and the Chinese government was established with the purpose to raise awareness about efforts that can contribute to more sustainable development among companies operating in China. This study looks into how Swedish organizations and companies support sustainable ways of working within the Chinese labor market.

Purpose: The purpose of this study is to achieve an understanding of, and to describe why, Swedish organizations and companies in the Chinese labor market act in order to be socially responsible. We also aim to analyze and present how the studied organizations and companies in question work practically towards their responsibility to society and how their operations affect people.

Method: This study is based on an abductive strategy with a qualitative research stance. The empirical findings are based on information from seven interview respondents working within Swedish organizations and companies in the Chinese labor market.

Result, Conclusion: Our basic rights and needs have to be fulfilled in order to be socially responsible toward others. Chinese growth is aimed at building a strong economy for their citizens and fulfilling their basic needs as a first priority. Because the country has focused on building a strong economy, there has not been enough emphasis given to social responsibility thinking. There is a need for all kinds of sustainable solutions that can contribute to

supporting economic growth which can lead to advancement in a long-term perspective.

However there is a positive aspect in this issue; there is growing interest within companies in China to learn about, and practice CSR activities.

Keywords: CSR, labor conditions, labor rights, China, sustainability, corporate responsibility

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Sammanfattning

Kandidatuppsats Ekonomihögskolan vid Linneuniversitetet, Företagsekonomi III organisation, examensarbete, 2FE74E, VT 2013

Författare: Emelie Glaser och Frida Eskilsson Ämne: Företagsekonomi

Handledare: Kjell Arvidsson Examinator: Mikael Lundgren

Titel: Corporate Social Responsibility - En studie kring svenska organisationer och företag som verkar i Kina

Problem: Kina har vuxit och växer fortfarande mot att bli en av världens ledande ekonomier, men i skuggan av denna snabba utveckling har landet behövt offra både sin miljö och människors hälsa, trivsel och säkerhet på sina arbetsplatser. Diskussionen om socialt ansvarstagande debatteras ständigt bland representanter över hela världen. Företag behöver agera ansvarsfullt för att deras verksamhet ska kunna vara framgångsrik på den globala marknaden. Företags verksamheter måste också baseras på hållbart agerande och tänkande. Vi finner att CSR är något som företag kan använda som strategi för att ta ansvar gentemot både anställda och samhället is stort. 2007 etablerades en överenskommelse mellan den svenska och den kinesiska staten med ett syfte att öka förståelsen om hur företag på den kinesiska arbetsmarknaden kan bidra till en mer hållbar utveckling. Denna studie undersöker hur svenska organisationer och företag arbetar för utforma långsiktigt hållbara arbetsmetoder.

Syfte: Denna syftar till att få en förståelse för och beskriva varför svenska organisationer och företag på den kinesiska arbetsmarknaden agerar socialt ansvarsfullt. Vi ämnar även analysera och presenter hur de studerade organisationerna och företagen arbetar praktiskt gentemot det samhälle och de människor som påverkas av deras verksamhet på något sätt.

Metod: Denna studie baseras på en abduktiv forskningsstrategi med ett kvalitativt arbetssätt.

Det empiriska resultatet är baserat på information från sju intervjurespondenter som arbetar inom svenska organisationer och företag på den kinesiska arbetsmarknaden.

Slutsats: Våra grundläggande rättigheter och behov behöver uppfyllas för att vi ska kunna agera ansvarsfullt gentemot andra än oss själva. Kina har vuxit för sitt eget syfte att bygga upp en stark ekonomi för landets invånare och prioriterat att uppfylla deras grundläggande behov.

Då landet har behövt uppfylla sina grundläggande behov har det inte funnits tillräckligt med kapacitet för att ta hänsyn till socialt ansvarstagande. Det är ohållbart att låta en ekonomi som Kinas växa så snabbt det in finns utrymme för hållbart agerande mot det enskilda samhället.

Det finns behov för hållbara lösningar som bidrar till att stödja den ekonomiska tillväxten så att den kan fortsätta utvecklas i ett långsiktigt perspektiv. Vi har funnit att det finns ett växande intresse hos aktörer på den kinesiska arbetsmarkanden att börja ta ett mer socialt ansvarstagaden gentemot både sina anställda och samhället som påverkas av deras verksamhet.

Nyckelord: CSR, arbetsförhållanden, anställdas rättigheter, Kina, hållbarhet, företagsansvar

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1.0 INTRODUCTION

This chapter contains an introduction to social responsibility in organizations and companies within the Chinese labor market, which is the topic of this study. Furthermore, we present one particular example which made us reflect on the importance of companies taking responsibility in society and, moreover, made us want to undertake this study. An introduction to the term Corporate Social Responsibility, CSR, which is what we have been using to describe how companies and organizations act socially responsibly, is also presented. The problem discussed leads to the research question and the purpose of this study.

1.1 Observation on a social responsibility issue

For years Tang Yinghong's employer, Ningbo Beifa Group, had advanced to become a top supplier of pens, highlighters and mechanical pencils to big retailers and stores (Roberts &

Engardio, 2006). Some years ago, Tang got the information that auditors from their biggest customer Wal-Mart, were going to inspect labor conditions at the factory where he worked as an administrator. At that point, Wal-Mart had already caught Ningbo Beifa Group on three occasions paying their 3000 workers less than China’s minimum wage and not complying with overtime pay. According to Tang, their business relationship would end if they were not going to follow the American Retailer's labor rules. In time, before the auditors got to the factory, a man who introduced himself as Lai Mingwei, contacted Tang. Lai Mingwei told Tang that he was a consultant working for the Shanghai Corporate Responsibility Management & Consulting CO., and that he, for a fee of 5000 U.S. dollars could take care of Tang’s Wal-Mart problem. Lai Mingwei offered advice on how Tang could create fake, but authentic looking records (Roberts & Engardio, 2006). He also suggested that the Beifa Group would move any workers that had any criticisms out of the factory on the day of the inspection. The consultant also instructed the managers at Ningbo Beifa Group as to what questions could be expected. After the coaching on how to confront the Wal-Mart inspectors, Tang’s Beifa factory passed the Wal-Mart inspection, even though the company had not changed any of their practices. A lawyer for Beifa confirms that the company employed the Corporate Responsibility consultant, but denies any misconduct concerning working hours or wages.

The Wal-Mart example is illustrative for what has put us into thinking about how companies act on a global market in regards to labor rules and rights. Where does responsibility start?

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What is most important; the employees' health? Caring about our shared planet? Or keeping down costs and prices to please worldwide customers' demands? This is not an issue with a simple answer. If there were an answer, it would depend on how we all look upon morality and how far we can stretch ethically toward one another at a global level.

1.2 Background

The above mentioned questions consider global concerns. We believe that such questions and issues need to be viewed from a broader perspective and therefore we present what is referred to as globalization. The convergence between developing and developed countries opens up opportunities for productivity and employment opportunities for nations involved with each other (Glyn, 2004). The interaction across geographical borders is referred to as globalization.

Globalization is influenced by the way countries shift toward market-driven economies where international trade is important.

However, the downside to globalization is the intensified competition, according to Glyn, which can in turn, make companies ignore the world’s environment and take advantage of poor working conditions (Glyn, 2004). On the one hand, having a job is important for most people, but on the other hand, having a job is not all that matters. The quality of the work performance is also important, since it contributes to economic competitiveness, social structure and personal well-being. A bad workplace can undermine health, generate in-work poverty and worsen child poverty. Bad workplaces can also cause gender inequalities in the labor market (Warhurst et al., 2012).

Due to the advent of globalization, environment pollution and shortage of resources and lack of labor rights, companies are expected to conduct their business in more socially responsible ways. CSR is being integrated in companies all over the world and concerns business commitment to CSR in missions, visions and value statements (Gao, 2009).

In June 2007, the President of China, Mr. Hu Jintao, visited Sweden. During this visit, Sweden and China signed a Memorandum on Corporate Social Responsibility called the Sino- Swedish Corporation. The Sino-Swedish exchange incorporates a broad range of issues such as international matters, human rights, trade promotion and development cooperation as important tasks (MOFCOM, 2013). We realize that there are both difficulties and opportunities operating across geographical borders.

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The Wal-Mart example is illustrative for problems that come with taking advantage of cheap labor in countries with lower wages and labor standards than other countries. We can see the Sino-Swedish Corporation on CSR as an opportunity for creating an awareness rising regarding these kinds of issues. Since nations have different levels of development and, therefore, different needs for action, the Sino-Swedish Corporation is a good example of how countries can learn from each other in acting socially responsible.

We have noted that the social responsibility discussion is constantly being debated by worldwide representatives. Companies need to act responsibly in order for businesses to be able to remain successful. It also has to be based on sustainable thinking and acting. We find CSR to be something that companies can use as a strategy for working with social responsibility toward both employees and society. We think that the Sino-Swedish Corporation was established because of a dire need for efforts that can contribute to more sustainable development of companies acting on the Chinese labor market.

1.3 Presentation of research problem

There are three kinds of organizations: nonprofit, governmental and for-profit organizations and each exists to meet society’s different needs (Werther & Chandler, 2011). Nonprofit organizations may have the purpose of meeting altruistic needs by aiding the underprivileged.

Governmental organizations often exist for providing security for the public by defining rules and structures of society. For-profit organizations, in the form of profit-maximizing companies, primarily exist for economic reasons in order for its owners to make a profit (Werther & Chandler, 2011:85). We interpret a for-profit organization as a company.

The three above-mentioned kinds of organizations interact with one another inside a larger context called society. The term society refers to the arena where unforced actions are made for the same interests, purpose and values. Society usually embraces a diversity of liberty and institutional forms, varying in levels of formality, independence and control. In society, norms and values determine what we believe to be right and what we believe to be wrong.

This refers to the concern about ethics and morality. The term also refers to principles and guidelines that influence a local society's moral choices (Benn & Bolton, 2011).

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Business’s ethics can be defined as “the study of business situations, activities and decisions where the issues of right and wrong are addressed” which has to do with what is seen as morally right and wrong regarding a commercial business, government organizations, charities and other organizations (Crane & Matten, 2007:5).

Companies have a positive influence on society by providing jobs, investing capital, purchasing goods, and doing business (Porter & Kramer, 2009). Porter and Kramer reason that the most important thing a company can do for society and for a community is to contribute to a wealthy economy. Companies are not responsible for all the world’s problems, nor do they have the resources to solve them all. However, companies can, by acting on a societal problem which they are equipped to deal with, at the same time gain competitive benefits. This can be seen as a win-win situation for both the company and society (Porter and Kramer, 2009).

We find this to be a complex issue as to how companies should act responsibly in regards to societal problems. Firstly, it is difficult to find a societal problem that a company is able to deal with and which also fits the company’s policy so that the activities can lead to benefit for the business. Secondly, defining responsibility is always problematic.

Borglund et al. (2012) means that there are different interpretations of responsibility; who is supposed to take responsibility? In what way should responsibility be taken? Using responsibility in different contexts, its substance is understood in different ways. One example is India, where a strong charity tradition has always existed where companies contribute to society and its basic needs, whereas such a way of taking responsibility in Sweden would be dictated by government edict. These differences affect the way companies view their responsibility in society. Internationalization contributes to an improved contact between countries and to a wider discussion about what social responsibility is. Nevertheless, the ideas of responsibility always need to be viewed from a local perspective by getting translated into activities and practices that fit local values (Borglund, et al. 2012). With a positive view of social responsibility, it is easy to see all the possibilities in both saving and earning money that it can contribute to (Grankvist, 2012).

In connection to social responsibility within companies, the term Corporate Social Responsibility (CSR) is widely adopted and Carroll (1979) has developed a four part model.

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According to the model, CSR consists of economic, legal, ethical and discretionary categories of business performance. Emphasis lies on ethics, since society expect companies to act on social issues beyond legal requirements. Grankvist (2012) means that CSR includes companies taking an ethical responsibility toward its environment and society as well as running its business with the purpose of being profitable.

With a background of knowing that the Sino-Swedish Corporation was established, we want to examine how Swedish organizations and companies make use of CSR. We want to get an understanding of what reasons and values that lie behind efforts contributing to more sustainable development when companies implement CSR in their business. These ideas have led to the following research question.

1.4 Research question

Why and how do Swedish organizations and companies operating in the Chinese labor market act in order to be socially responsible?

1.5 Purpose of the study

The purpose of this study is to achieve an understanding of, and to describe why, Swedish organizations and companies in the Chinese labor market act in order to be socially responsible. We also aim to analyze and present how the studied organizations and companies in question work practically toward society and how their operations affect people.

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2.0 METHODOLOGY

According to Boeije (2010), research deals with asking and answering researchable and relevant questions. There are many different ways for researchers of shaping their analytical activities. This chapter consists of the research methods used for this study. Firstly, we present our research strategy and stance. Next, we present the organizations and companies from which the empirical information was collected. Finally, we discuss the quality of the way we obtained our research. The purpose of the chapter is to explain how we examined why and how Swedish organizations and companies work in a socially responsible manner within the Chinese labor market.

2.1 Research strategy

Within business research, there are different reasoning processes regarding the relation between theory and practice: induction and deduction (Christensen, et al., 2011). By using an inductive stance, the researcher moves from a specific observation to a much broader and general claim, consisting of theories. Jaccard and Jacoby (2010) write that it is important to ensure that the researcher’s example of his or her observation is representative of the general case in order to support an argument or a proposition.

The process of deduction is when the researcher asserts a general principle based on theory, and argues that his or her particular case is an example of that principle (Jaccard & Jacoby, 2010). Christensen et al. (2011) outlines this process as moving from the general to the specific by deducing hypotheses and test them on empirically collected data.

According to Alvesson and Sköldberg (2007), a third research process called abduction is a combination between an inductive and deductive process. The alternation between these two gives the researcher an opportunity to find new inspiration and patterns in his or her study.

Within abduction, the empiricism is interpreted out of a hypothetical pattern which then is confirmed by new observations.

2.1.1 Choice of research strategy: abduction

Our choice of research strategy is abduction. Neither induction nor deduction is suitable since we did not initiate the study by strictly generating theories out of observations, nor the other way around.

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We have let the theoretical framework change throughout the process to allow new theoretical aspects and angles form as a result of our empirical findings, generated from our experiences during our stay in China.

This study was conducted over a period of approximately six months. The last two months were spent in China, which is where we collected our empirical information, mainly through interviews at Swedish organizations that all have CSR as an important part of their daily work. At home in Sweden, we planned the trip to China for four months, partly by reading about CSR and deciding which companies to collaborate with in China. We believe that we achieved a good understanding about the subject of the study well in advance before starting the collection of empirical facts. This gave us the chance to combine our theoretical knowledge with empirical findings along the whole process. After having concluded the interviews, we continued to study literature that would fit our empiricism. This is why we claim that abduction is the most appropriate method.

2.2 Research stance

The main research stances are the qualitative and quantitative stances (Boeije, 2010).

Individuals have an active role in the construction of our social reality and capturing this process of social construction is what Boeije claims to be required by qualitative research.

The qualitative stance is supposed to generate a deeper knowledge of the subject than the quantitative, which primarily focuses on numbers and quantification (Bryman & Bell, 2007).

Qualitative research seeks to understand and interpret the contextual influences on the research issue (Hennink, et al. 2011). Conducting a qualitative approach is therefore suitable when the researcher addresses “why” questions to understand and explain issues or “how”

questions that can describe behavior and processes. Through an interpretative way of researching, the researcher seeks to understand people’s life experience from an inside perspective. Finally, the interpretative approach involves that people’s experiences of reality is subjective and therefore there can be many different perspectives on reality, rather than one single truth (Hennink, et al. 2011). Qualitative research for example, includes working with texts based on interviews or observations. The final result of a qualitative study is often a text including quotes from interviews. Notes from observations are mixed with the writer’s own comments and interpretations (Bryman & Bell, 2007).

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Our study focuses on, and explains how different kinds of organizations and companies in the Chinese labor market act in socially responsible manner. In order to get a thorough understanding of this subject, a qualitative research stance is chosen. The reason for this choice is the strategy’s emphasis on getting a deeper understanding of the subject. In order to do this, we have chosen to interview people that we find to be experienced and competent within the field. We have aimed to reach for people’s experiences about how CSR can be used practically in their daily work and we consciously asked them to share examples of how they practice CSR. We have interpreted the empirical data at hand in order to understand and explain how and why the studied organizations implement CSR in the Chinese labor market.

This kind of understanding is more applicable to this study rather than a quantitative approach in which focus lies on looking for quantifying data and answering questions considering how many or how much. Selection of empirical data exists from interviews with people working in Swedish organizations and companies operating in China. Interviews as a research tool highly suit our study because they give information about, and an understanding of people’s experiences.

2.3 Collection and selection of empirical data

Collection of data to research can be done in various ways (Svenning, 2000). Data that is collected by the researcher through surveys or interviews are referred to as primary data collection. Secondary data collection is referred to material that is used from previous studies that someone else has performed. This study is based on primary data which consists of seven personal interviews regarding social responsibility.

We have based our study’s empirical data on experiences from people that work in organizations and companies professionally practicing CSR in the Chinese labor market.

Before agreeing on whom to interview, we made sure that they all had a good insight in CSR and professionally act within this field in their daily work. We have also aimed to collect the empirical information from people at a managerial level within the specific organizations and companies, and not at the operational level. We found it difficult to get in contact with people at an operational level due to China’s restrictions and also to language barriers among Chinese workers.

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We chose to interview people from a number of different organizations operating in the Chinese labor market with influencing corporate responsibility in different ways and to different extents. This was a deliberate choice since we wanted to achieve a picture as nuanced as possible about how and why organizations and companies act socially responsibly.

We consider the advantage with interviews to be the straight and reality based response about how the interviewees work with social responsibility. We also believe that our primary data provides this study with current and up-to-date information about CSR. Below, in 2.3.1 Qualitative interviews, we will present the method used for collecting empirical information through interviews.

2.3.1 Qualitative interviews

Within qualitative research, doing interviews to collect empirical information is a commonly used method (Packer, 2011). An in-depth interview can be described as a conversation with a purpose where the respondent shares a story and the researcher elicits the story. This kind of interview is used when seeking detailed insight and information on the study issue by taking part of the respondent’s individual and personal experiences (Hennink et al., 2011).

In order for the researcher to keep track of the interview, he or she develops a list of questions, called an interview guide, in advance (Hennink et al., 2011). A typical interview guide follows the structure of introduction, opening questions, key questions and closing questions. In-depth interviews are more or less structured. Packer (2011) writes that in-depth interviews are typically semi-structured which refers to the researcher's approach of having a general plan for the topic, but not following a certain order of questions particularly strictly.

Boeije (2010) confirms this by mentioning that, the more an interview is planned beforehand, the more the interviewee can determine the flow of the interview. Other types of interviews than the semi-structured ones, are called unstructured or structured (Boeije, 2010). An interview that is pre-structured to a low extent gives the interviewee a chance to speak freely about his or her experiences within the subject in his or her own words (Packer, 2011).

This study follows a qualitative research stance, which means that we have looked into how organizations in the Chinese labor market act socially responsibly.

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It has become natural to collect empirical data through interviews since they have contributed to a deep understanding of how CSR is being used. Semi-structured interviews are adequate to this study's research method since we wanted the respondents to speak liberally about the subject based on their experience.

We developed an interview guide to be used during the interviews. The guide worked as a general disposition for the in-depth interviews. Before doing the interviews, we tested our interview guide by simulating an interview with a Human Resources Student who had recently done a research project on CSR. By testing our questions, we found out whether they would be suitable for our interviews. We made some minor changes in the interview guide by adding a few questions and correcting wording. The questions in our interview guide worked as guidelines during the conversation, to make sure that the topics would be covered. Whether one question was asked by us and then answered, or if the respondent answered the question spontaneously, was of less importance.

2.3.2 Respondents for the qualitative interviews

The selection of respondents was made by choosing professionals within the area of social responsibility. We contacted the respondents via e-mail before arriving in China. We set the dates for the interviews well in advance and confirmed the meetings through telephone calls on location in China. Below, we will present the organizations, companies and the respondents from each of our interviews. We will also present some information about the occasions when the interviews took place.

SVENSKA CELLULOSA AKTIEBOLAGET, SCA: is a global hygiene and forest company. SCA develops and produces hygiene products. Their products are sold in approximately 100 countries and TENA and TORK are their two global brands. SCA has approximately 37,000 employees, and the net sales in 2012 were SEK 85 billion (SCA, 2013).

At SCA, we interviewed three people. The first interviewee was Wesley Chiu, the company’s General Counsel who is one of the company’s main sustainability professionals. The second interviewee was Catherine Liu, SCA Asia Pacific’s Communication Specialist. We decided to do the interview with the Communication Specialist because we wanted to get information about how the communication department at SCA uses CSR to spread knowledge about sustainability throughout the company.

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Our interview with Wesley Chiu and Catherine Liu took place at 2 pm, the 7^th of April 2013 at Starbucks, Chang Ping Road in Shanghai. The reason why we did not go to the office of SCA was because it was located where there was no convenient public transport. Meeting in central Shanghai, and the fact that two representatives were attending at the same time, was a request from Chiu and Liu. We thought that doing the interview in a coffee shop would not be an optimal location due to the noise, but we sat down in a quiet part of the coffee shop and from listening to the recordings, we had no difficulties hearing the words of Chiu and Liu.

Chiu was more talkative than Liu and provided the most information. They shared catalogues and brochures about SCA’s sustainability work. They also showed us Videos and Power Point presentations. The interview lasted for 1 hour and 40 minutes.

Our third interviewee at SCA was Cindy Jin, the company’s Human Resources Manager who we contacted thanks to her HR position and we wanted to hear how she works with CSR regarding labor conditions. The interview with Jin took place at SCA’s new office in French Concession in Shanghai on the 22^nd of April 2013. The company had just changed offices to one in central Shanghai, which made it more convenient for us to meet Jin. We were welcomed in the reception and the first thing we took notice of was a Chinese/Swedish flag merged with the SCA logotype. We were showed around and had a seat in a meeting room overlooking the rest of the newly renovated office building. The interview lasted for 30 minutes.

BUSINESS SWEDEN – SWEDEN SUSTAINABLE BUSINESS (SSB) DEPARTMENT:

Business Sweden is jointly owned by the Swedish state and its subsidiary (Näringslivet). The mission of Business Sweden is to enhance the image and increase the awareness of Sweden as an attractive business partner. As a part of Business Sweden in Shanghai, SSB is a platform for CSR. SSB’s task is to facilitate Swedish companies to increase their awareness regarding CSR-work through implementation of joined business activities (Business Sweden, 2013).

At Business Sweden, we interviewed Hanna Elving, SSB’s Project manager. She was the first person for us to contact during the initiation of our research project since we found her to be highly representative in the field of CSR in China. The interview took place at 10 am on the 8^th of April 2013 at the office of Business Sweden in the Sail Tower in Shanghai. Elving welcomed us in the reception of the office and showed us around before we sat down and started the interview. The interview lasted for 50 minutes.

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THE CENTER FOR CHILDREN’S RIGHTS AND CORPORATE SOCIAL RESPONSIBILITY, CCS CSR has been operating in China since 2009. The center's main focus is to offer business advice on children’s rights. CCR CSR is a social enterprise that provides knowledge, competence and experience in order to help companies to implement CSR-strategies related to children’s rights (CCR CSR, 2013).

At CCR CSR we interviewed Sanna Johnson, Executive Director. We chose to contact Johnson when we found information about CCR CSR online and considered her to be highly experienced and competent in CSR practices in China. We also found it relevant to learn about the CCR CSR Center’s work for children’s rights and young workers’ rights. Our interview with Johnson took place at 2 pm on the 10^th of April 2013 in the Dong Wai Office Building in Beijing. She was occupied in a meeting when we arrived at the office. We were offered coffee and sat down to talk to one of her colleagues while waiting. The small office, decorated with white IKEA furniture and Easter ornaments, gave us the feeling of being in a Swedish office. During the 40-minute long interview with Johnson, one of her newly recruited employees attended since Johnson thought it would be informative for her to listen to our conversation about how CCR CSR works practically with CSR. We found her to be very energetic and dedicated to her mission of working for children’s rights.

THE CSR CENTRE AT THE EMBASSY OF SWEDEN: The Centre for Corporate Social Responsibility (CSR) at the Swedish Embassy in Beijing was established in 2010 as a result of the bilateral agreement due to the Sino-Swedish Corporation between Sweden and China with the aim to strengthen the cooperation in CSR between China and Sweden. The purpose of the center is to increase knowledge and the application of responsible business in China.

The focus lies on understanding the conditions for CSR in China and to raise awareness of CSR among Chinese authorities, companies and organizations. The CSR center’s function is to facilitate companies in their contacts with the Chinese authorities and organizations that connect international policymaking to corporate reality (Sweden Abroad, 2013).

At the CSR Centre of the Embassy of Sweden, we interviewed the Second Secretary Emma Ludvigsson. We were recommended by Hanna Elving to interview Ludvigsson because they collaborate professionally and Elving finds Ludvigsson to have wide experience in the field of CSR. Our interview with her took place at 1 pm, the 11^th of April 2013 at the Embassy of Sweden in Chaoyang District, Beijing.

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Ludvigsson showed us to a conference room where we sat down and were served coffee. We were not allowed to record the approximately 50 minute long interview due to the Embassy’s restrictions, so we took detailed notes from the information that she shared.

NELSON GARDEN AB: The Swedish company Nelson Garden AB was founded in 1933 and began by selling seeds by mail order from the Swedish county of Blekinge. Today the company is located in Tingsryd in the south of Sweden. Nelson Garden is the market leader in their field in Scandinavia and their product range includes mainly seeds and bulbs but has expanded to gardening appliances and accessories, birdseeds, etc. The company has had Chinese suppliers since almost 25 years (Nelson Garden AB, 2013).

At Nelson Garden, we interviewed the CEO and owner of the company, Torsten Nilsson.

Because of his long experience working with Chinese business partners, we found Nilsson to be an ideal respondent for our study. Nelson Garden set standards when starting the collaboration with Chinese companies and we find the company to be socially responsible.

However, Nelson Garden does not openly use CSR as a marketing tool and, therefore, we wanted to talk to Nilsson in order to get another angle of working with social responsibility.

Our interview with Torsten Nilsson took place on the 19^th of April 2013 on Skype. We had planned to meet him in Shanghai, since he was going there for business, but due to his tight schedule we decided to conduct the interview online instead of an actual meeting. The interview lasted for 50 minutes.

2.3.3 Processing of empirical data

Within grounded theory Glaser and Strauss (1967) mean that through codification, qualitative research can create legitimacy. The purpose is to develop theories through an inductive strategy. According to Charmaz (2005), codification is when the researcher defines short codes based on the content that is described by the interview respondent. The researcher compares data in order to find similarities and differences. Directly after our interviews took place, we transcribed the contents word by word to support our impression of the respondents while still fresh in our memories. We claim that this increases the trustworthiness in our empirical collection. As Charmaz explains, we coded the transcriptions into general themes based on what we found particularly important and useful for answering our research question. We have been using the code system that we identified when processing our empirical data throughout the whole research.

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2.4 Collection and selection of theoretical information

The theoretical sources used in this study consist of previous studies about the subject of social responsibility. We have carefully chosen the literature incorporated in chapter 4.0 Theory, which has been connected to our empirical data in 5.0 Analysis. The information has mainly been collected from books and peer reviewed articles. The articles are collected from scientifically approved databases; Business Source Premiere and Emerald. There is a lot of research done, and also ongoing research within the subject of CSR. This focused us to use the most representative information within the field. We have used common sources that we find legitimate since they are frequently used by other researchers that have made similar studies to ours. The sources were used for gaining information about CSR for our theoretical framework. We have tried to match the sources with recent publications from books and peer- reviewed articles.

We are aware of CSR being a concept that does not have a fixed definition and can be defined in various ways as there is no clear right or wrong. Therefore, we would like to point out that some of the used sources in our theoretical framework are normative. For showing this, we have been using words such as means, argue, claims, and thinks, to show that the presented findings are based on the authors’ perceptions.

The study’s framework has been summarized in a theoretical synthesis in which the various theories and perspectives have been concretized. The theoretical synthesis is based on the study’s main themes which have later been followed in the empirical and analytical chapters along the same structure.

2.5 Cross-cultural research

Cross-cultural research in business and management tends to be an important variable that exerts deep influence on organizational behavior (Bryman & Bell, 2007). There has been a tendency to question the adaptability of many management theories and practices to a non- Western cultural context. Cross-cultural research presents barriers and difficulties doing a research in a different country especially when language and cultural differences are likely to be significant (Bryman & Bell, 2007).

Doing research in China has made us reflect on important differences regarding issues that are often taken for granted in a welfare country as Sweden.

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Based on that, we realize that the result of our research is not applicable to any other kind of study and that different contexts should be viewed with an open mind in order not to be limited in the analysis. The result of this study is applicable to China, and not to Sweden since taking social responsibility has different meanings in different countries that have not yet reached the same level of development in society. From our point of view, this also makes the study even more interesting and meaningful. Since we have stayed in China during this research project, we have had the opportunity to observe a different culture and society than ours. This required us to be more culturally sensitive than it would have been, had we done the research in Sweden.

2.5.1 Language limitations

According to Smith (1996) doing research in a foreign language demands consideration of translation and interpretation of strategies which can have implications for a research process.

Smith (1996) sees difficulties in doing research in a foreign language since contact between home language and foreign language can leave room for interpretation. These lie between different forms of cultural understanding and cultural practice.

Our mother tongue is Swedish and we can find some language limitations in translating the results of the Swedish interviews into English. To meet this problem, we asked the respondents to read through chapter 3.0 Empirical findings, which contains their words and expressions translated from Swedish into English. We let them comment on the contents to confirm that they would want to represent the information which we had translated. The rest of the interviews were done in English, where neither the respondents nor we, have English as mother tongue. We assume that this may have limited the result. Since the interviewees were speaking a foreign language we may have missed some information and they may have been limited in their sharing of personal thoughts. However, we find the selected information representative for carrying out this study and produce a satisfying result examining how and why Swedish companies and organizations in China act socially responsibly.

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2.6 Research ethics

Within qualitative research, some ethical issues may occur (Hennink, et al., 2011). Sometimes the researcher has to assess whether a decision or action is ethical, and what consequences a decision may have. What is considered ethically right or wrong depends on the researcher's subjective background, experience, gender, etc.

Qualitative interviews aim to generate the respondent's perceptions, beliefs and feelings of people within a trust relationship. Therefore, it is often ethically relevant to keep the acquired information secure and make the data anonymous. Vogt, et al. (2012) writes that informing the respondents about the interview topics in advance, gives him or her a chance to decide whether or not to volunteer. One more step to avoid doing harm in data analysis, is to let the respondent review the summary of the interview before using it in the research (Vogt, et al.

2012).

In this research, we have been aware of ethical issues by considering the importance of respecting the requirements of the respondents. Firstly, we sent e-mails to them in advance in order for them to get an idea of what topics would be during the interviews. Secondly, we asked them all in advance whether recording the interviews was accepted. Ludvigsson did not agree to that due to the Embassy’s restrictions so we took more time to take notes during the interview instead. Thirdly, after having transcribed the interviews, we e-mailed the transcriptions to each respondent for them to approve to be used in our research. In this study we have not made the empirical data anonymous because none of the interviewees required us to do so. We find anonymity to be important as an ethical aspect when doing research and this is also something that we have considered during this study. We would have made our respondents anonymous if they were not comfortable with their names being mentioned in this study.

2.7 Research quality

Below, we describe reasons to why we find that the results of our study are trustworthy.

According to Bryman and Bell (2007), there are four criteria of describing trustworthiness within qualitative research; credibility, transferability, dependability and confirmability.

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Credibility is a criterion of trustworthiness within research (Bryman & Bell, 2007). A sustained engagement and determined observation can improve the credibility of research (Lincoln & Guba, 1985). According to Bryman and Bell, credibility ensures that the research is carried out according to norms of good practice. It also ensures when the researcher reports the findings to the people that are a part of the social reality that has been studied, to confirm that the investigator has correctly understood that social world.

In this study, we are aware of an existing risk that we may have misunderstood the empirical results and we want to emphasize that the results of our study are formulated based on our personal interpretations of the social reality. To meet this risk, we have made attempts to ensure that we have understood the reality of the respondents. After having done the interviews, we listened to the recordings, transcribed their information word by word, and sent out the interview transcriptions to each respondent. They read through the transcriptions to either accept it or respond with requirements to make some minor changes.

2.7.2 Transferability

Within qualitative research, the researcher often study individuals who share some characteristics (Bryman & Bell, 2007). Therefore, the focus of the findings lies on a contextual uniqueness and the meaning of the studied social reality. Lincoln and Guba (1985) mean that it is an empirical issue whether the results of a researcher’s findings are transferable into another situation, or in a similar situation at some other time. We find the results of our study to be transferable to some extent. We think that results of a study comparable to ours, will always depend on whether the research is done in a society with the same level of development, the same values and the same prerequisites for implementing CSR in a labor market. Some answers to why and how Swedish organizations and companies act in order to be socially responsible in the Chinese labor market, may be transferable to other situations;

for example practical ways of implementing CSR activities. However, we find that the answers depend on the local context.

2.7.3 Dependability

Dependability as a criterion in qualitative research has to do with ensuring that complete records are kept of all stages of a research process.

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These include formulating a problem, selecting research participants, establishing fieldwork notes and interview transcripts and making data analysis decisions. During the research project, peers can act as auditors to assess the quality of the chosen research procedures (Bryman & Bell, 2007). In our research, we have consciously established a progression in order to eventually reach conclusions regarding why and how Swedish organizations and companies act in order to be socially responsible in the Chinese labor market. We have done our research by formulating an adequate research question, selected people from Swedish organizations and companies to interview, made interview guides and transcripts, and analyzed our findings to be able to answer our research question.

We have not had colleagues reviewing our study during the research process, but we have had an advisor from our university giving us comments on our study and we have also got constructive criticism from our examiner. We believe that these people have helped us in giving recommendations about how to improve our work.

2.7.4 Confirmability

Confirmability is described as the researcher proceeds from the insight that it is impossible to be completely objective in business research. This means that he or she does not let personal values and theoretical directions to affect the derived findings (Bryman & Bell, 2007). We agree that being objective in our qualitative research is impossible since we have formulated the research problem, as well as established interview questions for the respondents and asked them questions based on issues that we have been interested in seeking answers to. However, asking open question to let the respondents speak freely about their CSR work, is one of our attempts to be objective in our research. In that way, we believe that we have avoided affecting the respondents’ answers when answering our interview questions.

Finally, we would like to add some aspects in the discussion of trustworthiness in our study.

We can see that generalizing results in this qualitative study is difficult, but we can find similar opinions and thoughts regarding CSR in the majority of the interviews. At SCA, we made three interviews and since we achieved many similar answers from these three respondents, we find an additional reason to support the trustworthiness in this study. Also, the three respondents from the Swedish organizations CCR CSR, Business Sweden and the Embassy of Sweden respectively, showed several similar patterns which we also find contributing to reliable results.

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We find that all our respondents have provided adequate information about how Swedish organizations and companies act in order to be socially responsible in the Chinese labor market since they have many years of experience which has showed in their way of describing how they work practically with this. We consider them to be skillful and knowledgeable since they work at professional levels and arrange education and training for governmental institutions, universities and actors on the Chinese labor market. We also find Torsten Nilsson at Nelson Garden to be a credible source since he has traded with China for 25 years.

According to Patel and Davidsson (2003), a researcher should have a critical view on the information that is being examined. There is a wide range of CSR literature in books and articles which has made it a challenge to select what we perceive as the most relevant sources to match our research. Therefore, we have been using several sources to minimize subjectivity in our theoretical framework. Since the CSR debate today is ongoing, we are aware that our theoretical data may not consist of the very latest findings and conclusion in the field. To present fresh information, we claim that the empirical data from our interviews contribute to current perspectives with practical examples of why and Swedish companies and organizations work with CSR today. It is also important to keep in mind that respondents may have the ability to over-exaggerate some information they share to present an issue in a certain way. To meet this problem, we have attempted to be critical towards the respondents’

answers.

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3.0 EMPIRICAL FINDINGS

In this chapter we present the empirical findings generated from our interviews within Swedish organizations and companies operating in the Chinese labor market. Firstly, we present the seven interviewees, and then our findings from the information they shared with us. We have divided the information into topics based on six different themes regarding why and how Swedish organizations and companies act in order to be socially responsible in the Chinese labor market. The chapter ends with a synthesis of the empirical findings.

The interviewees who have contributed to our empirical findings are presented below.

Wesley Chiu has a professional background as a lawyer and started working at SCA in 2006 as a General Counsel. He was a part of setting up the SCA Asia Pacific head quarter in Shanghai and then became in charge of legal matters and sustainability at SCA in Asia.

Catherine Liu works as a Communication Specialist for SCA Asia Pacific and her responsibility mainly lies in external and internal communication. The internal communication includes publishing news on SCA’s internal website and externally Liu organizes meetings and conferences for product launches to promote SCA’s products in China and Asia. Liu joined SCA in 2012. Before that, she worked for Pay Pal for several years after her post-graduate in London studying Communication Policy.

Cindy Jin is the Human Resources manager as SCA in Shanghai since 2009. She has an academic background from Business Administration and Human Resources.

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Hanna Elving has lived in Shanghai since 2009. Elving has a Master degree in International Economics and Political Science from Uppsala University. Before moving to China she worked with environment issues in the Swedish government. Since August 2012 she has been working at Business Sweden in Shanghai as a project manager of Sweden Sustainable Business in China.

Sanna Johnson has been working with developing corporation since 1989. Johnson comes from a family that has been into solidarity work since she was born. Johnson studied Developing Countries courses and International Relations at the University of Gothenburg. Before Johnson went to China she was based in Beirut for six years as a regional director for Save the Children. Today, she is the Executive Director of CCR CSR in Beijing, China.

Emma Ludvigsson, has worked at the CSR Centre at the Swedish Embassy in Beijing, China, as a Second Secretary since March 2012. She has a Bachelor degree in Economics from Sweden and a Master degree in International Politics focusing on Chinese Politics and Diplomacy from Fudan University in Shanghai.

Ludvigsson works at the CSR Centre at the Embassy of Sweden and she is employed by SIDA as a Bilateral Associate Expert.

Torsten Nilsson is the CEO and owner of Nelson Garden AB. He grew up being part of his father’s seed retailing business and took over the company in 1978. Nilsson has been working with Chinese business partners since 1988.

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3.1 Prerequisites for taking responsibility

Chiu at SCA thinks that social responsibility is only something a person can consider once his or her rights are fulfilled.

“So the question is, if you follow the same development curve, you ask people to get rich first and then to protect the environment and work with CSR, then it’s already too late. So how do you push this point of awareness of responsibility forward and still allowing time to develop?” he says.

Since China is a developing country, he means that CSR is not used very much among companies and the general public yet. He says that CSR is only used by the elites; more financially healthy companies. Chiu thinks that education and bringing up the awareness among people and companies is the only thing to do.

3.2 Social responsibility in China

Elving at Business Sweden sees social responsibility as long-term sustainability by caring about the society in which the corporation is a part. CSR is about creating efficiency in companies by working in a sustainable way; by for example creating good conditions for the workers so that they become more dedicated to the company. This leads to higher productivity and a more profitable business. Elving emphasizes that CSR is not about charity, it is about streamlining operations by working in a sustainable way.

Johnson at CCR CSR says that due to China’s vast size, big investments, and since the market economy was set free the economy has worked its own way and the juridical system another.

The problem is then, that the country does not have the control mechanisms to assure that everything is being correctly done. She adds the importance of remembering that China as a nation is difficult to generalize due to its regional differences. In 2007 the Chinese and the Swedish government agreed on CSR collaboration. The Chinese government wanted to learn how CSR is being used in Sweden. Since China is one of the world’s main production industry there was an interest to learn how to act socially responsibly in a global, societal and corporate perspective. Johnson knows that the interest for CSR among companies in China is growing. She has one example of a company taking responsibility towards society by building a school, which she thinks is a fantastic initiative.

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However, she thinks that it is even more important for companies to turn into their own business; developing a Code of Conduct for example. Doing that is challenging and time and money consuming, but it helps companies to keep their workers and to favor their wellbeing.

Johnson says that she enjoys seeing that many companies want to act responsibly.

Elving at Business Sweden also finds a growing interest in CSR among companies in China but also among Chinese students. Ludvigsson at the Embassy of Sweden also finds that generally, the awareness of CSR is constantly increasing. In China, many companies want to expand globally and that needs a good CSR work. Ludvigsson says that Chinese companies don’t work much with CSR in general, but an increasing number of companies realize that they should, in order to become a more attractive employer. Elving says that one big challenge among Chinese companies is to raise the awareness of how to improve workers’

wellbeing and also the importance of using the protection equipment. She has noticed that many company representants have a bad self-confidence; they think that they do not know enough about CSR.

Nilsson at Nelson Garden says that through the years he has been working with China he thinks that the Chinese behave fairly well today considering issues about social responsibility, but it is incredibly tough; the economy controls everything after all. In general, Nilsson thinks that Chinese people really care about sustainability, although it takes a long time for changes to be done in society. He says that we hear many bad news about China’s bad working conditions and environmental problems but he thinks that they are very developed in environmental projects, and they make a lot of efforts to improve their situation.

3.3 A stakeholder perspective of CSR

Johnson says that CCR CSR was founded in 2007, as a result of the Sino-Swedish Corporation after an agreement between the Chinese and Swedish government. Johnson means that the Chinese wanted to learn from Sweden how to work with CSR since China is one of the main production nations to supply the whole world with all kinds of products. The practical collaboration depends on the context, but generally, it has to do with companies taking social responsibility toward stakeholders in society, their employees and also customers in a global perspective. Johnson adds that CCR CSR follows the kind of tools used for acting responsible, that are used by Save the Children. CCR CSR then contextualizes those tools into ways that fit factory environments and other contexts.

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CCR CSR follows the Child Convention that was established in 1989 as a base to define CSR.

In 2012, the United Nations launched Business and Human Rights. This refers to the Global Compact and consists of eleven principles about company responsibilities and child rights. In short, these principles aim to encourage decent work, no child labor and no marketing that harms children.

Ludvigsson, working at the CSR Centre of the Embassy of Sweden, says that Sweden is the only country that has a bilateral corporation with China on CSR, and the CSR Centre is, as well as CCR CSR, a result of the Sino-Swedish Corporation agreement. Ludvigsson says that the center mainly follows the international guidelines on CSR such as the Global Compact from the United Nations, OECD’s guidelines for multinational companies, the European Unions’s strategy on CSR and the guidelines from the Government of Sweden. She explains that they work with Swedish organizations such as CCR CSR, the Swedish Institute and Business Sweden.

Elving at Business Sweden says that the ongoing Swedish Sustainable Business (SSB) project was founded in 2009, for the purpose of raising the knowledge about CSR among Swedish companies operating in the Chinese labor market in order to facilitate their businesses. The institutions financing this project together with the Government of Sweden are the Swedish Export Credits Guarantee Board (EKN), Swedfund, the Regional Council in Kalmar County, Region Gävleborg, the Provincial Government of Östergötland and the County Administrative Board Kronoberg. SSB have their own Code of Conduct which is based on OECD’s basic principles and recommendations in Global Conduct. They also follow the Swedish state’s definition of how to work with CSR. In their daily work, Business Sweden follow values that come from believing that companies benefit from working with CSR.

SCA is being influenced both externally and internally as to how they work with CSR, according to Chiu. Following labor laws and rules is taken for granted, he says. Externally, they are affected by their stakeholders, meaning their customers, suppliers and shareholders.

SCA has a list of topics about human rights, quality, safety, among many other aspects regarding how to work with CSR. Chiu means that SCA wants to meet their stakeholders’

prioritized topics based on what they consider most important to the business regarding how they want the company to act socially responsible. The topics are put into a matrix that clearly shows the prioritization. They are also officially presented in the company’s sustainability reports.

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SCA puts the stakeholders’ priorities into practice by defining targets and how to work practically with each topic. SCA works with external consultants in their practical sustainability work, but they also have many professionals internally, for example an environmental committee with international representatives.

3.4 Using CSR as strategy

Using CSR as strategy within a company is about developing methods connected to the company’s core business, focusing on making the daily work more sustainable, says Elving at Business Sweden.

Chiu at SCA gives one example of how CSR strategy can be combined with innovation.

Recently SCA introduced a new diaper model which needed less material and transportation than the earlier models. The reductions of carbon dioxide footprint and material costs are both beneficial through reducing costs for the company and also to preserve the environment. Chiu says that, this example illustrates what SCA strongly believe; that sustainability has a strong linkage with innovation.

3.4.1 Branding trough CSR

According to Chiu at SCA Pacific the core reason for SCA to use CSR is because it helps them to get public awareness of SCA’s products and brands.

“If you know that some tissue is more sustainable and the other one is produced from cutting down the rainforest, if the price is similar then you would probably go for the sustainable one”, says Chiu.

Chiu means that SCA, through different CSR activities, want to improve their competitive edge trough brand awareness. Using CSR activities gives SCA a selling point compared with their competitors. Liu, Communication Specialist at SCA confirms this by saying that, from the communication side, CSR activities help SCA to get a public awareness of the company’s products and brands. CSR also helps them to reduce costs, Chiu illustrates with an example;

“if a factory gives a target to reduce energy consumption this gives advantage the environment but at the same time it will benefit the company”.

Corporate Social Responsibility: A study of Swedish Organizations and Companies operating in China