Vol. 38 (Nº 33) Año 2017. Pág. 33
Svetlana Valentinovna IUDINA 1; Svetlana Anatolyevna KARIMOVA 2
Received: 05/06/2017 • Approved: 15/06/2017
ABSTRACT: The reference to the corporate social responsibility issue is largely connected with such circumstances as the delay of the development of Russian competitive markets, imperfect corporate governance mechanism, the specificity of interests within corporations on its periphery, etc. The lack of common benchmarks of responsible behavior and uniform parameters of social reporting in Russia also produce research interest. It is known that the degree of accommodating the interests of different parties in the activities of large corporations affects both their own development and social strain in society. The formation of socially responsible business behavior was the natural reaction of companies and states on the contradictions intensification in their relationship. Despite the common objective root cause of this phenomenon, in many countries responsible business behavior regulation happens in different ways. Today, Russia needs a mechanism and corresponding algorithms that will make it possible to efficiently and reasonably resolve the contradictions arising in Russian companies, to solve them taking into account the interests of each side. |
RESUMEN: La referencia a la cuestión de la responsabilidad social de las empresas se relaciona en gran medida con circunstancias tales como el retraso en el desarrollo de los mercados competitivos rusos, el imperfecto mecanismo de gobernanza empresarial, la especificidad de los intereses dentro de las empresas en su periferia, Y los parámetros uniformes de la información social en Rusia también producen interés de investigación. Se sabe que el grado de acomodación de los intereses de las diferentes partes en las actividades de las grandes corporaciones afecta tanto a su propio desarrollo como a su tensión social en la sociedad. La formación del comportamiento empresarial socialmente responsable fue la reacción natural de las empresas y los estados sobre la intensificación de las contradicciones en su relación. A pesar de la causa raíz común de este fenómeno, en muchos países la regulación del comportamiento empresarial responsable ocurre de diferentes maneras. Hoy en día, Rusia necesita un mecanismo y algoritmos correspondientes que permitan resolver eficaz y razonablemente las contradicciones que surgen en las empresas rusas, resolviéndolas teniendo en cuenta los intereses de cada parte. |
The problem of corporate social responsibility (CSR) of business is burning. The relations of business and society in the world passed a long evolutionary way of transformation. In Russia, these relations underwent revolutionary changes. The negative attitude in the Russian public consciousness results both from misunderstanding of the sources of social and economic development and from the features of the privatization of the 1990s and its consequences (Carroll 1979; Friedman 1970; Bowen 1953).
This research should be referred to the category of theoretical; therefore, the main method of cognition used by the authors is an axiomatic method based on the application of certain basic statements taken on trust, but at the same time the logical development of these statements leads to the removal of other provisions of the theory.
In particular, the analysis of the latest studies and publications in which the aspects of CSR are considered and on which the authors are based allowed accepting as axiomatic proof statements the following:
Decisively, these provisions are still discussed, but a certain amount of abstracting, admissible in such cases, enables the authors to insist on their verity.
Among the practical methods used in the research, a comparative-historical method, methods of classification and generalization should be noted.
Is it possible to use the experience of other countries when forming the Russian national model of corporate social responsibility? What part of business responsible behavior has to self-regulate and what part has to measure up strictly to the norms regulated by the state? How timely for the moment is socially-focused work of corporations? The research of special literature is able to answer these and other questions. In the course of the research, it was necessary to consider the main concepts and evolution stages of social responsibility; the models reflecting the main specifics and history of the countries.
CSR is understood in the research as the voluntary desire of the company to help society not so much from the point of view of its interests, as from the point of view of all parties interested in the corporation’s activity (Social Responsibility of Business, n.d.; Social Responsibility of Business, n.d.; Zaretskiy & Ivanova 2013). As a part of the study, the authors made an attempt to sum up the main concepts formed in the theory and to estimate their "working" character in the conditions of modern Russia. As of today, it is possible to highlight the most noticeable views:
1. The concept of the "classical approach" which characterizes CSR as responsibility of modern managers (who are experts in the management sphere) to those who are the owners of companies (employer-investor) for receiving and effective use of the invested financial resources.
2. The concept of "reasonable egoism" which considers CSR as responsibility of the company for doing business with using its potential in the market, that is, the improvement of its image, building relations in team, the involvement of new clients, and the increase in sales.
3. The concept of "corporate altruism" which considers CSR as responsibility of the company for making strong contribution to the improvement of the quality of life in the country, as follows: spending money for social programs, the companies reduce their current profits, but thereby increase the activity and stability of their stream in the long view.
4. The theory of the "integrated approach" which treats CSR as the responsibility of the company which is taking part in charity (social activity), and focuses the efforts connected with the main areas of organization’s activity around any certain area. The main task consists in the mitigation of contradictions between the interests of the company and society.
Today, CSR is presented by national models reflecting this or that civilization of the country. They are presented in Table 1.
Table 1. Characteristics and main features of the formed models:
Models (countries) |
Common indicators |
||
State |
The periods of social development |
Development of the direction (vector) |
|
1 |
2 |
3 |
4 |
European 1. Belgium, the Netherlands, Finland, Sweden; 2. Austria, Germany, France, partially Great Britain |
- active work in regulation of the social and labor relations within a certain country (branches, enterprise) is carried out; - partial participation in the social and labor relations (the enterprises and trade unions show an increased activity in ensuring the stability in the country) |
it originated more than hundred years ago, but in the past 25 years received the greatest development jump |
- economic; - ecologic; - social |
American (the USA, Canada, countries of Latin America, English-speaking countries of Africa) |
- a certain role in decision-making and regulations, recommendations and requirements is carried out (the whole responsibility for the regulation of the social and labor relations goes to the enterprises, including participation in charity) |
from the 19th century, the voluntary initiative of the companies in the help to various social strata acts as a basis |
- economic |
Asian (Japan, South Korea, China, Malaysia, Thailand) |
- actively carries out the work in CSR sphere, and sometimes forces the companies to it (business is charged to provide housing, training, and motivation) |
over the past 15-20 years, certain development of CSR has been observed |
- social |
Russian (whole Russia) |
- active participation is focused on promotion of social responsibility and regulation of the social and labor relations (and the enterprises with the state share provide all social infrastructure) |
over the past 10-12 years, business structures and state have shown active attention; now it is in the development stage |
- social - economic |
Many researchers believe that at the moment it is Europe, but not America, that has become the leader both on usage scales and by efficiency of CSR. The Russian model of CSR is at the active development stage. The various interpretations of CSR are observed in the studies.
There are points of view considering CSR, on the one hand, as a certain contrast, antagonism to the business nature, on the other hand, – as a condition of the controversy mitigation between labor and capital, small business owners and large corporations and so forth. However, there is incomprehension of the value of the social responsibility concept in Russia.
Apart from the most popular modern renderings, widespread in scientific literature, it is necessary to analyze so-called "academic" definitions of this concept. They are presented in the works of famous Russian and foreign scientists who have made an essential contribution to the ideas and fundamental principles of social responsibility.
As social responsibility appeared in the midst of the 19th -20thcenturies and is connected with the development of social programs in various activities stipulating one or another responsibility before the parties, the development duration in this direction shows, more than likely, that this phenomenon has fundamental principles. The formation and adoption of CSR in real terms now becomes more and more burning, and many (top) companies at present do not imagine other principles of relationship building with the stakeholders. But Russia is just in prospect of making the way of understanding and adoption of these principles, at the same time, undoubtedly, adapting them to national culture, system of economic relations, etc.
The present stage of social responsibility concept development is inseparably associated with the standardization of requirements to corporations in the field of social policy and standardization. SA 8000 "Social Accountability" standard developed in 2007 on the basis of the International Labor Organization’s recommendations is applied to the certification in the field of social responsibility. It specifies requirements as to respect for the rights of personnel to work and requirements for labor protection, without concerning other parties of CSR. It contains requirements to the management in the field of social responsibility. In 2007, the Russian Organization for Quality put in force the ROQ-CSA-2007 standard "Corporate Social Responsibility", on the basis of which, the national organizations for quality of Russia, Ukraine, Kazakhstan and Serbia accepted in 2008 the international CSR-2008 standard. It introduced the requirements to the organization’s activities in the field of rights to work and labor protection, social guarantees for personnel, production (services, works) of appropriate quality, environmental protection, resource-saving, participation in social actions, and support of local community initiatives, as well as to social management. All these requirements were consolidated in 7 modules, and modules "A" and "G" are harmonized with the SA 8000 standard. The standard did not establish the requirement to sound business practice and financial transparency because observance of these requirements is controlled by the state. The CSR-2008 standard included the requirements which could be subjected to objective examination by declaring or certificating according to the rules existing in the countries, the national organizations on quality of which joined that standard. In 2010, ISO 26000:2010 Guidance on Social Responsibility was accepted. It "represents the guide on the principles which are the basis of social responsibility, on the main subjects and problems concerning social responsibility, and on ways of socially responsible behavior integration into the strategies, systems, practices and processes of the organization". The standard can be applied by any organization. The present standard can also serve as the handbook for the organizations, experts and the involved external experts when carrying out an activity in the field of social responsibility, declaring and certificating of this activity. The standard is developed taking into account the provisions of the United Nations Global Compact on the actions in the field of CSR recommendations of the International Labor Organization, as well as the international ISO26000 and SA8000 standards and other international documents. The national organizations for quality can apply this standard taking into account features of the legislation existing in their countries.
The consideration of the CSR nature is impossible without emphasizing the main contradictions (obvious and hidden) between the acting groups-interested parties (stakeholders) in interaction of the organization with external and internal environments. As for review of the emerging relations and interests, they are always not only different, but all too often opposite. Their analysis is obligatory as, having reached certain compromise, it is possible to simplify and increase the overall performance of all interested parties.
It is necessary to define each category of the groups-interested parties to have a clear notion of their interests and focuses (Table 2).
Table 2. Stakeholders’ characteristics
Groups – interested parties |
Definition |
Interests |
Main focus |
1 |
2 |
3 |
4 |
Partners |
these are those people or companies whose business, first of all, coincides with their own business relation to it, i.e. those organizations that represent the firm and sell its products.
|
- their interest consists in the help and movement together with the company; - regularity of supplies and product quality as well as support service are important for them |
- strategic vision and achievement of positive economic effect;
|
Clients |
these are those who buy and use the products of the firm, such as end users, enterprises that use the firm’s production for further processing.
|
- their interest consists in receiving the necessary goods for fair prices at proper for them time and on a wide variety, of high quality, as well as with security and operation guarantee of the product. |
- clients’ needs satisfaction at the expense of provided products and services for fair prices.
|
State |
these are those who adopt laws, various norms, set and enact the budget, effectively allocate it, in other words, monitor the general
|
- their interest generally consists in proceeds from tax payments; - they enforce compliance with legislation in the activity of each company; - they are interested in support of population employment |
- achievement of the overall social and economic balance in the country
|
Staff |
these are those who are authorized workers of the organization employed on a contract basis, or on other conditions satisfying both parties (employee-employer)
|
- their interest consists in receiving remunerations for work and award, in career advancement opportunities (status), terms and conditions of their employment, social guarantees; - their interest consists in level of authority and responsibility, as well as in level of their work satisfaction. |
- benefits obtaining in exchange for labor
|
Shareholders |
these are those who have put up (invested) money into the company with a view to value realization. |
- their main interest consists in receiving annual payments (dividends), as well as other benefits (difference in the cost of purchase and sale; balance of their portfolio); - payback and interest repayment, as well as monitoring of effective use of funds |
- to earn (to increase their income); - control of the company;
|
Ecology (society) |
these are those (a person, groups of people, associations) for whom conservation of favorable environment is a value. |
- guarantees of elimination of the negative consequences which are danger to society
|
- elimination or reduction of the possible risks which are danger to society |
The characteristic of the groups – interested parties gives a clear idea of how far, and at times contradictory, their interests are. The interests of stakeholders can conflict with each other, and together they can be considered as a consistent contradiction (whole), interests’ resultant of parts of which will define the direction (vector) of evolution of the organization.
Having considered some characteristics of the stakeholders, the contradictions of the interests of interested parties’ primary groups with the companies’ interests were revealed (Table 3).
Table 3. The peculiarities of the contradictions between various groups – interested parties
No. |
Groups – interested parties |
Influence and their interests |
Interests variety |
Contradictions |
1 |
2 |
3 |
4 |
5 |
1 |
Partners |
- guarantees and mutual benefit of exchange; - accountability
|
the feature of the partners is the interest in the conclusion of the contractual mutually beneficial and reliable relationship whereas for the company it is additional investments and consistency of stable partnership relations
|
are that the main interest for partners is obtaining all information on the company’s work, whereas it is not always advantageous for the company
|
2 |
Clients |
- wish of quality of products and - fair prices; - safety of the product range choice
|
this provision of a desirable final product is important for the clients, whereas for the company it is important to minimize the expenses and receive the greatest profit (focus on customer) |
are that the main interest for clients is a high-quality service, but for the company it is connected with extra-budgetary resources for professional development of personnel for service of such quality |
3 |
State |
- taxes payment; - ratio of the legitimacy of the activity; - investments into regional and local budgets
|
the state is interested in taxes payments, whereas the enterprise is interested in openness and transparency
|
consist in that the main interest for the state is a formation of budget revenues at the expense of tax proceeds, whereas for the company it is important to form the funds from profit which is not included into taxable base (for example, investment programs) |
4 |
Staff |
- high level of salary; - promotion; - level of satisfaction with work
|
carrying out the work, the personnel are interested in receiving the maximum salary whereas the company is interested in receiving the maximum profit and in minimization of expenses
|
the interest for personnel consists in receiving the benefits and guarantees (work, salary), whereas the interest for the company is an establishment of the most favorable conditions and agreements with these workers |
5 |
Shareholders |
- size of revenue (dividends); - value appreciation of the shares |
for shareholders receiving the dividends, whereas for the company’s executives it is greater control over all activities |
is that for shareholders it is receiving the dividends whereas for the company it is a reduction of rates on dividends
|
6 |
Ecology (society at large) |
- support of local community (public work) |
the extent of rendering the quality of services and products is important for society, but for the company it is not always beneficial
|
is that the interest for society is a safe ecological situation, whereas for the company it is not always desirable costs for this (the work connected with ecological developments and resource-saving programs) |
That is, oftentimes the interests of the company and stakeholders contradict one another as the wish of managing directors is more autonomy, and the wish of shareholders is in greater control whereas the wish of personnel is in the larger salary, and the wish of clients – in fair prices and safety, etc.
All the companies holding leading position in the world market (for example, OAO "Norilsk Nickel", OAO "Severstal", OAO "Tatneft", OAO "Surgutneftegas", OAO "Rostelecom", and others) consider the interests of various groups – interested parties (various incentives are created for employees allowing to prompt workers to the interest in success of the company) as it is this that creates a real basis for social responsibility, promoting the success of the company and general development. It should be also noted that the achievement of such equilibrium (or balance) of various groups’ interests allows to expect the positive net result provided by the strategy of the company.
The essence of the considered contradictions of all interests reveals itself through two possible sides:
Therefore, considering an essence of the emergence of the reasons of contradictions between various groups’ interests, it is important to put that the realization of certain interests can impede the realization of others. Therefore, it is important to create such a mechanism for coordinating and promoting the satisfaction of the main interests of all interested groups. It is believed that resolution of all occurred conflicts comes down to wayfinding of the compromises based on a diversity and divergence of the interests and possible help from the state creating certain conditions for balance and congruence of the parties’ interests.
Apart from obvious corporate contradictions, traditionally the hidden conflicts of groups are customarily pointed out. A.S. Semenov and Yu.S. Sizov (Alekseev, Bobryshev and Bokhanova 2002), having analyzed the essence, contents and hidden purposes of the corporate conflicts of the past years, point out the following types of contradictions:
The authors believe that all hidden contradictions are based on the lack of the feeling of "social justice" at this or that party of the relations.
It is supposed that the hidden contradictions in corporations are not limited by the above-provided list therefore it is suggested to expand this list by means of even more inexplicit relations that have a conflict nature.
Today, the questions of corruption in state authorities and in corporations are the most discussed in society at multiple levels. Corporate corruption represents danger to society in general as it is the one that not only thwarts progress of the companies, but also forms stable culture of opportunistic behavior which becomes norm. In the context of research, it is important to reveal those hidden conflicts of interests which have ability "to accumulate" and turn into a "snowball". The main contradiction in this case consists in making inefficient decisions by the corrupted managers. If the system doesn't fight with them, an "outgrowth" is formed around the corporation, consisting of the firms, affiliated with managers, which raises extension costs.
It should be assumed that corporate corruption is a global problem (i.e. not purely national); therefore, its emergence and development are connected with the following features:
In terms of the prevalence of corruption in public sector calculated by Transparency International methodology, Russia ranks one of the leading places in the world (by estimates of 2011, the 143rd place among 182 countries). The research of the Ernst & Young audit company which has interviewed 2 365 employees from 25 European countries has shown that the most part of the companies deals tolerantly with improper conduct of the employees at all organizational levels, and not a few specialists of the large companies consider bribery admissible for getting profitable contracts, assume a possibility of misstatement in financial statements.
The second problem existing in different cultures (first of all, in Asian, Arab, and Latin American) and worsening in the Russian realities is associated with the "clan" nature of career and low (if not to say, zero) opportunity for promotion for highly-qualified professionals having quite frequently unique competences, but forced to be content, at best, with "supporting role". The worker's demotivation occurring in this case leads not only to decrease in the efficiency of activity, but also to the growth of social strain.
Thus, the conducted research shows that on a global scale the formation of socially responsible business behavior was a natural reaction of companies and states to contradictions intensification in the interests of the parties, more or less interested in the decisions made at the corporate level. From here, the understanding of the importance of the CSR concept in general derives, though in different countries the regulation of responsible business behavior happens in different ways. The mechanism and the corresponding algorithms are needed that will make it possible to effectively and reasonably eliminate the emerging contradictions in Russian companies, to resolve them taking into account the interests of each party. It will allow building a national model of CSR that is effective and corresponding to the realities of modern Russia, considering the specific features of the present moment of the corporate relations development in the country.
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1. Kazan National Research Technical University named after A.N. Tupolev – KAI, Almetyevsk branch, 423457 Almatyevsk, Stroiteley Av., 9B
2. Almetyevsk State Oil Institute, 423457, Almatyevsk, Lenina St., 2