“Make” or “Buy” the Choice of Governance Modes for Corporate Social Responsibility Projects from a Stakeholder Management Perspective

Francesco Gangi,Eugenio D’Angelo

doi:10.5539/ibr.v10n8p80

Abstract

The organization of corporate social responsibility (CSR) initiatives deals with a “make” or “buy” trade-off among in-house solutions instead of a partial (collaboration) or total (outsourcing) externalization of such activities. This article aims to advance the knowledge of the criteria underlying the governance modes of CSR. In particular, integrating the organizational economics with the insights provided by the stakeholder management, the study deepens the reasons why primary stakeholders, such as human resources (HR) and customers, may affect the choice to internalize the governance of CSR projects. Findings are consistent with the theoretical framework. In fact, internal solutions are more likely for CSR initiatives addressed to HR and customers. Given the direct linkage of these stakeholders with the achievement of the company’s mission, results corroborate the concept of closeness of CSR actions with respect to the firm’s core business as driver of in-house projects.

Highlights

Over the years, companies have had to face a growing demand for a greater social responsibility coming from various stakeholder groups
The empirical investigation is based on the observation of corporate social responsibility (CSR) initiatives disclosed through the social reports published in 2012 by the Italian companies listed on the Dow Jones Sustainability Index Europe (DJSIE) in 2013
human resources (HR) represent 34% of CSR initiatives (163 projects) and customers cover 15% of the samples (73 initiatives), while 51% of the projects are oriented toward other interest groups, such as the community or the environmental stakeholders (247 projects)

Summary

Introduction

Companies have had to face a growing demand for a greater social responsibility coming from various stakeholder groups. It has increased the need for a more stringent scrutiny of CSR initiatives. Antithetical, the mentioned pressures have triggered a broad debate since the well-known Friedman’s position (1970) on CSR as an agency problem (McWilliams et al, 2005; Harris & Freeman, 2008; Salazar & Husted, 2008). No theory on CSR decision-making may endure if it contradicts the fundamental principle of wealth creation by the firm (Husted et al, 2010)

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Conclusion