What makes business leaders to behave socially responsible? Challenging times for CSR: Learning from local business leaders in Bangladesh
Author: Nika Salvetti
Translated into Spanish by Silvana Gordillo
Since the last financial crisis, the business sector has been shaken by societal pressures and demands for implementing more responsible and sustainable business models which would contribute to address the root causes of the crisis but also to alleviate climate change and promote a more equitable and inclusive economic growth. As a response, global businesses have been expanding their supply chains in new markets to benefit of lower costs of production, often without considering its negative consequences, but also investing in new technology and innovative approaches to address their negative impacts on society and the environment. So far the world is witnessing an increased economic growth and showing a greater commitment towards the achievement of the SDGs. Nevertheless, the remarkable economic growth, especially in South East Asia, is not always coupled with sustainable path of growth. In this region, there is a growing pressure on critical natural resources and the ecosystem overall, producing further externalities and burdens on society (Sachs, 2012).
To face such challenges, business leaders in all continents are looking at how they will adjust to change. According to McEwen and Schmidt (2007) conscious business leaders and change makers will not hesitate to review their modus operandi and apply technological changes, diversify the customer base and invest in long-term sustainable plans. Conventional leaders will just look for alternative options to escape the crisis and ensure the annual financial results as promised to the Board (Cowe, 2002). The dilemma described by Frank (2004) is between self-interest and common goal. According to the neoclassical theory, the invisible hand will readjust the market to its efficient and most adequate evolution; thanks to the rationality of the Homo Sapiens who would take the best and most timely decision to solve a critical problem. However most individuals are motivated by self-interest, and therefore they might take unpredictable decisions which are more emotional than rational (Mlodinow, 2013; Cook-Greuter, 2004). In line with this argument, business leaders might act rationally in response to their responsibility if guided and regulated by laws and to attain sets of standards. However, they might also behave ethically and responsibly when induced by engaging mechanisms relying on shared values and morals (Nijhof, Wilderom & Oost, 2012).
Would such considerations also apply to the local business leaders of Bangladesh? Indeed globalization and business interconnectedness helped spreading the new business consciousness, evoked by societal demands and expectations, to all sectors and societies. In particular, the garment sector of Bangladesh has been at the center of international attention since the Tazneer and Rana Plaza deadly accidents in 2012 and 2013 which raised enormous criticism and pressure on all stakeholders operating along the global supply chain to improve their corporate social and environmental responsible behaviours. Local suppliers had been under the spot light as accused to be the primary responsible of these deadly accidents.
This research aims at challenging these criticisms by targeting the local business leaders as units of analysis to understand their motivations and what factors influence different behaviours with respect to CSR, assuming that local leaders are relevant forces of change who can lead towards the attainment of sustainable growth. Thus the main research question is: ‘What factors influence CSR behaviours of local business leaders in the garment sector of Bangladesh?’. To answer this question the research adopted three main theoretical perspectives at historical, individual and institutional level of analysis. The choice of studying CSR behaviours at different levels of analysis is driven by the need of finding new methodological approaches that could lead to multi-level of analysis of CSR behaviours in qualitative research. Thus this PhD thesis will first apply and analyse each perspective in a separate study and then it will integrate and synthesize their findings in the conclusion chapter. As this research focuses on the garment sector of Bangladesh and analyzes its institutional complexity, it also contributes to the growing research which analyses CSR in developing countries (Jamali & Carroll, 2017; Jamali & Karam, 2016; Jamali, Karam, Yin and Soundararajan, 2017).
From a methodological point of view, this research is merely qualitative with an interpretative interactionist nature applying a single case strategy. Its main qualitative analysis method is template analysis. This is justified by the fact that the research aims at exploring the human experience of individuals, the local business leaders, operating in the garment sector of Bangladesh. The researcher started with an inductive approach based on general observations that led to the formulation of theoretical assumptions. Then it focussed on developing a pre-understanding of the phenomenon under study, its social context and historical path, and definition of problem statement while conducting extensive field research in Bangladesh. The pre-understanding helped to identify preliminary themes and variables to understand the root causes of the problem and to design a preliminary conceptual model and a priori code template. Such template had been used and re-adjusted along the research process to align with the research objectives of each study.
The PhD thesis is structured as follows. After introducing the research topic and its aim in Chapter I, Chapter II will analyze the historical CSR evolution of the garment sector of Bangladesh to provide more insights on the research context and complex institutional environment. In Chapter III it will address the ‘intrinsic’ motivations by applying the leadership theory of action logics. Chapter IV will then move to identify and analyze those extrinsic institutional factors, their logics and dynamics that influence CSR behaviors in the sector. Finally, Chapter V will conclude by integrating and synthesizing the findings of each study to contribute to a multi-level analytical framework that helps with a deeper understanding of the intrinsic and extrinsic factors that influence CSR behavior in a specific sector.
Chapter II analyses CSR’s evolution in the garment sector of Bangladesh by reviewing its institutional historical evolution and the growing challenges of sustainability that are affecting the sector. It identifies relevant historical benchmarks, it provides a deeper understanding of their origin and it helps explaining CSR evolution in this sector and country. At the same time it analyses the sustainability gaps from the demand and supply side of the market. Zadek CSR developmental stages model is used as theoretical framework, to highlight historical change patterns.
The study uses qualitative research methods such as semi structured interviews with 25 experts and extensive review of secondary information of official documents, reports, and media articles. The findings shed light on all those structural problems and sustainability challenges that are still affecting the garment sector of Bangladesh and that, if not addressed in a timely and comprehensive manner, they will lead to an arrest of the remarkable economic growth of this country. With reference to Zadek CSR stage model, CSR in Bangladesh is moving from the defensive stage to a compliant stage, with only a few companies achieving the management and strategic stages of CSR. International pressure, so far, seems to be the leading driver to move the garment sector into the civil stage of CSR, in which collaborative forms of stakeholders’ participation would eventually promote the active adoption and replication of CSR behaviours at sectoral level and beyond.
Chapter III reveals how local business leaders operating in a complex institutional environment, make sense of reality, think and act in order to fulfil their role to contribute to sustainable development, by adopting different corporate social responsible (CSR) behaviours. The main objectives of this study are to identify those intrinsic motivational factors, action logics that influence CSR behaviours of local business leaders, despite the complex institutional environment in which they operate. And more specifically, to distinguish the action logics that drive local business leaders to pursue a different variety, in breadth and intensity, of corporate socially responsible behaviours.
It applies the constructive development theory to leadership, to better appraise leadership effectiveness in adopting CSR behaviours. In particular it uses the Action Logics framework of Rooke and Torbert (2005), to further analyze what type of leadership action logics is required to adopt several and advanced forms of CSR behaviours. It targets nine business leaders through purposive sampling and applies mixed qualitative methods, such as pre-test, factory’s visits, in depth interviews. The study uses template analysis by developing a coding process that ultimately depicts the overarching themes. The study produced an initial 55 relationships between action logics and CSR behaviours, clustered in four distinctive patterns. The study reveals that: (1) Higher action logics are needed to be engaged in more advanced stages of CSR practices; (2) It is at the achiever action logic level when leaders start moving towards advanced stages of CSR behaviours; (3) Lower action logics can not induce advanced stages of CSR behaviours; (4) Business leaders with higher action logics can still apply practices of the full range of CSR stages.
Chapter IV focuses on identifying and analysing those extrinsic institutional factors that influence the adoption of CSR behaviours. Its main research sub-question is: “What institutional factors influence CSR development in the garment sector of Bangladesh?”. To address this sub-question, this study focuses on understanding what factors induce the advancement of CSR behaviours; what factors inhibit such a transition and, finally, what factors can contribute to overcoming potential bottlenecks in this transition and explaining the logics (why) and the way (how) this transition occurs.
It applies the neo-institutional perspective to depict and analyse all those extrinsic institutional factors that prompt certain CSR behaviours and their potential dynamics in a determined institutional complex setting. It designs a theoretical framework that explains CSR behaviours and their variation along the stage model of CSR (Maon, Lindgreen and Swaen, 2010) from an institutional isomorphic standpoint, bearing in mind the dynamics of power and politics backing each institutional factors’ logics (Hirsch & Lounsbury, 2014; Lok & Wilmott, 2006); this in order to understand how CSR behaviours advance and progress as a result of institutional factors. It analyses the potential relationship between variables to define whether influence exists between them and to explore the mechanisms of how such influence works. The focus of the research is on understanding mechanisms through asking ‘what’, ‘how’ and ‘why’ questions, adding on neo-institutionalism the promises of institutional complexity and logics. In total 15 semi-structured interviews and 10 in depth interviews have been conducted. The coding process allowed the identification of 93 relationships between institutional factors and CSR behaviours.
The study demonstrates that all the institutional mechanisms considered are relevant in all the CSR development phases as they act interactively and interdependently to achieve certain behaviours. However the transition to advanced CSR phases is promoted by the interaction between the various institutional pressures, the changing nature/logics of the individual institutional pressures and the level of engagement and power of influence exercised by the various stakeholders in each of the CSR cultural phases.
Finally Chapter V integrates and synthesizes the findings of all three studies in order to address the main research question. In addition it takes upon the challenge to fill the gap in CSR literature to empirically analyse CSR behaviours at both institutional and individual level of analysis (Aguinis & Glavas, 2012). Moreover it contributes to the emerging rich literature of CSR in developing countries, by focussing on studying a local complex institutional environment while targeting local units of analysis.
By reviewing and integrating the research findings of the three studies, it can be concluded that the neo-institutional factors that influence CSR behaviours in the garment sector of Bangladesh are better explained if they are put in perspective of an historical institutional perspective; and that the combined efforts of advanced forms of action logics with the influence of neo-institutional mechanisms lead to advanced forms of CSR behaviours. While studying CSR in developing countries such as Bangladesh, specific attention should be given to those factors that promote the market demand for CSR, with particular emphasis on local culture.
The research outcomes of the three studies generate a general answer to the main research question of this PhD thesis ‘What factors influence CSR behaviours of local business leaders in the garment sector of Bangladesh?’.
If we want to understand how CSR evolves we cannot do so without understanding the action logics development of leadership in relation to the changing institutional complex environment in which they operate. This because it is only with higher level of action logics development that it is possible to lead to transformation if, however, there is a conducive environment which enables such transformation. Moreover the historical institutional analysis of a specific sector is relevant to provide more understanding on the logics of certain institutional factors, which, combined with an analysis of the action logics of local stakeholders, are the key potential determinants to contribute to CSR advancement. Thus depicting all those intrinsic and extrinsic factors that enable business leaders to adopt CSR behaviours, would help elaborating effective measures that would encourage the institutionalization of CSR in a specific context.
The specific focus on Bangladesh, its garment sector and its local suppliers, also provides new insights on how business approaches can adjust in order to fulfil the more pressuring societal demands for more responsible and sustainable corporate behaviours. At the moment that all stakeholders operating along a global supply chain align their efforts and resources to upgrade it socially and environmentally, this would be a good step to achieve sustainable growth.
I wish all the readers of this PhD thesis to recognize co-responsibility for the deadly accidents that happen in other countries far away from home as a result of our self-interest, so that tomorrow we can wake up and take constructive actions as citizens, customers and professionals to contribute to eliminate any forms of social, economic and environmental injustice that today is affecting our world.
Fellow Researcher & practitioner with wide-ranging experience in the field of social responsibility, sustainability, CSR and management. She has a PhD from Nyenrode University on CSR, an MA in Post War Recovery Studies and a Bsc in Economics who helped her gaining a solid professional experience in the fields of management, development cooperation and academia in post war countries and emerging economies. She is currently active in academia as a senior lecturer and researcher in Europe at Nyenrode Business University, Costa Rica at UPEACE, Vietnam at UEH/ISB and Bangladesh. In the last few years, she focussed her professional attention on the circular economy with specific reference to plastics. Her strong personal and professional values are based on justice and fair mindedness, respect of human dignity, acceptance and respect of diversity, commitment to a sustainable and responsible world.