Implementing the UN Global Compact: The impact of the initiative on its business participants

Abstract

The implementation of corporate social responsibility (CSR) is crucial for the legitimacy of the organization in today’s globalized world. In the absence of a global governance system, several initiatives have been created to support companies in designing, implementing and communicating CSR. So far, however, only few studies have attempted to empirically evaluate the impact of such initiatives on organizational practices. The aim of this study is, hence, to enrich our knowledge of the implementation of CSR in the largest voluntary CSR initiative—the UN Global Compact (UNGC). My analysis contributes to the existing literature on CSR in several ways: drawing on insights from institutional and stakeholder theory, I develop a theoretical model to explain variation in formal UNGC implementation. Moreover, I conduct a theoretical study of the newly introduced UNGC ‘Differentiation Programme’ as well as the current accountability structure of the initiative. The goal of my empirical analysis, then, is to enrich our knowledge of whether and, if so, how the length of UNGC business membership impacts the formal implementation of the initiative. Contrary to theoretical arguments by UNGC critics, my results suggest that the length of UNCG membership does affect organizational corporate practices: companies that have participated longer in the UNGC report higher levels of UNGC implementation than those that have only recently joined. On the other hand, the difference appears to be much smaller than previous practitioner studies have suggested.