Corporate Responsibility: Beyond the Hype: So-Called "Stakeholders" Have Relatively Little Influence on Decision-Making at Europe's Large Companies

By Steger, Ulrich; Salzmann, Oliver et al. | European Business Forum, Spring 2008 | Go to article overview

Corporate Responsibility: Beyond the Hype: So-Called "Stakeholders" Have Relatively Little Influence on Decision-Making at Europe's Large Companies


Steger, Ulrich, Salzmann, Oliver, Ionescu-Somers, Aileen, European Business Forum


Advocates of corporate sustainability in the media, business and civil society claim that stakeholder pressure on companies to improve their social and environmental performance is rising. But does this claim hold up against a sober empirical analysis across different stakeholders in Europe? In fact, managers responsible for corporate sustainability, corporate social responsibility, public affairs and the like often complain about a lack of external pressure, which makes it difficult for these managers to build their own case (Steger 2004).

To answer the question, we launched an empirical study of nine stakeholder groups: NGOs and consumer organisations, financial institutions, governments, cities and communities, corporate customers and suppliers, unions and media (Steger 2006). Among other things, we examined:

(1) How important corporate social and environmental performance is to these groups.

(2) How satisfied they are with current performance levels.

(3) How and to what extent they influence companies.

Instead of "prescribing" a definition of corporate sustainability--"corporate citizenship" or "CSR"--we provided stakeholders with a list of 15 items (such as compliance with regulation, accountability and transparency, clear social and environmental targets and corporate donations and sponsoring) describing different dimensions of corporate sustainability.

We collected our data in five regions: Germany, Austria, and Switzerland; Great Britain and lreland; the Nordic countries and the Netherlands; Spain and Portugal; and France and Belgium. Between May and November 2005, we conducted 265 semi-structured interviews. We mailed a questionnaire-split equally by stakeholder group and region-to 16,000 personalised addresses. Finally, we interviewed 15 managers in multinational companies to "test" our findings on corporate decision makers and experts.

The minds of stakeholders

Overall, our results are somewhat sobering. We received responses to less than 2 per cent of our mailed questionnaires-a clear finding in itself. Overall, we found that stakenolders have little interest in corporate sustainability, for three major reasons:

* First, social and environmental standards are high in Europe, enforcement is on average strong and compliance is widespread.

* Second, Europe is struggling to stay competitive in global markets, and so companies have gained considerable bargaining power. Thus, the inclination to tighten standards and push for significant improvements of social and environmental performance is rather weak. The only really demanding stakeholders are the NGOs. But they can do little without buy--in from companies' primary stakeholders--customers, creditors, legislators, and so on.

* Third, companies have gone through a significant learning process since the 1990s, and are managing their issues and stakeholders much more systematically today.

In this situation, it is not surprising to find a clear trend towards co-operation, from both companies and their stakeholders. Moreover, stakeholders are likely to co-operate among themselves: unions and NGOs, and unions and governments. For example, politicians will jump on to the bandwagon of unions that publicly criticise companies for major layoffs after reporting profits.

Most stakeholders consider the monitoring of corporate social and environmental performance to be a formidable task, for two reasons. First, stakeholders tend to lack capacity, and this applies in particular to unions and cities/ communities. Second, the scope, complexity and dynamics of global markets and companies overwhelm even well-equipped stakeholder organisations.

Financial markets and media are seen as having the greatest ability to influence corporate social and environmental performance. Furthermore, most stakeholders--unions, governments and communities in particular--consider themselves more influential than other stakeholders see them. …

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