Corporate Governance in the Debate on CSR and Ethics: Sensemaking of Social Issues in Management by Authorities and CEOs

• DOI: http://doi.org/10.1111/j.1467-8683.2009.00738.x
• Author: Annick Van Rossem,Yves Fassin
• Date: 01 September 2009
• Published date: 01 September 2009

Corporate Governance in the Debate on CSR

and Ethics: Sensemaking of Social Issues in

Management by Authorities and CEOs

Yves Fassin* and Annick Van Rossem†

ABSTRACT

Manuscript Type: Empirical

Research Question/Issue: The goal of the present exploratory cognitive study is to uncover how opinion leaders – CEOs

and other authorities in the domain of social issues in management – understand and differentiate the various concepts

pertaining to corporate governance, corporate social responsibility (CSR), and business ethics. The present study with the

Repertory Grid Technique (RGT) extends the analysis to the whole spectrum of social issues in management. For this

research 41 RGT interviews were conducted in Belgium with top experts and CEOs of the Belgian economy and civil society.

Research Findings/Results: Both authorities and CEOs pragmatically and rather clearly differentiate the various concepts

related to corporate governance, CSR, and business ethics. Our f‌indings partiallyreject the confusion in terminology noticed

in recent academic literature and in corporate communication, emphasizing increased vagueness and overlapping of the

concepts around corporate governance, CSR, and business ethics.

Theoretical Implications: While CSR is seen as the best candidate for an umbrella term, no unif‌ied paradigm has yet to be

achieved in the business and social f‌ield. Three basic concepts of corporate responsibility, corporate governance, and

business ethics emerge as being complementary. Corporate governance has acquired an important place in the hierarchy of

business and society concepts.

Practical Implications: Corporations cannot restrict their actions and communication regarding social issues in manage-

ment to one single domain. Several complementary issues have to be addressed simultaneously. This combined multi-

dimensional approach will result in mutual reinforcements of the message.

Keywords: Corporate Governance, Corporate Social Responsibility, Business Ethics, Sensemaking, Cognition, Reper-

tory Grid Technique, CEO

INTRODUCTION

Recently academic research has developed a new area

involving business and society. The business world is

also increasingly paying attention to the concepts of corpo-

rate governance,corporate social responsibility (CSR), stake-

holder management, and business ethics. Moreover, many

other related concepts have been introduced, such as sus-

tainability, triple bottom line, and corporate citizenship.

Such an explosion of concepts and def‌initions, it has been

argued, has led towards an increased vagueness and

ambiguity (Van Marrewijk, 2003). With unclear semantics

and special terminology, concepts are continuously mixed

up in terms of context, content, and perspectives (Epstein,

1987; Wheeler, Colbert and Freeman, 2003; Fisher, 2004).corg_738573..593

The major objective of the present analysis is to explore the

distinctiveness and clarity in the perceptions that opinion

leaders have concerning the concepts applied in this impor-

tant f‌ield of business and society. The f‌ive major concepts in

this study are, in addition to corporate governance, four

central elements of the business and society domain –

business ethics, CSR, stakeholder management, and sustain-

ability. By determining how opinion leaders make sense in

this area and by analyzing which unique knowledge struc-

tures (or mental models) opinion leaders have developed in

this f‌ield, this study attempts to achieve greater clarity

in how these actors perceive the relationships between

*Addresses for correspondence: Yves Fassin, Departmentof Management and Entre-

preneurship, Ghent University, Tweekerkenstraat 2, 9000 Gent, Belgium. E-mail:

y.fassin@skynet.be

†Annick V. Rossem, Vlerick Leuven Gent Management School, Reep 1, 9000 Gent,

Belgium. E-mail: Annick.van.rossem@fulladsl.be

573

Corporate Governance: An International Review, 2009, 17(5): 573–593

© 2009 TheAuthors

Journal compilation © 2009 BlackwellPublishing Ltd

doi:10.1111/j.1467-8683.2009.00738.x

corporate governance, CSR, business ethics, and other

related concepts. The concept of sensemaking is particularly

relevant for organizations in complex environments (Pater

and van Lierop, 2006). In addition, the concept of sensemak-

ing has recently been applied to CSR, shedding new light on

the content-based models of CSR and on certain aspects of a

f‌irm’s decision making and its strategies in engaging with

the world (Cramer, Van Der Heijden and Jonker, 2006; Basu

and Palazzo, 2008). Some of the confusion in the CSR and

ethics f‌ield results from ambiguity stemming from a lack of

knowledge or conversely, from an overload of information

and new concepts (Carroll, 1999). Such ambiguity may lead

to a search for meaning. Hence, sensemaking can be consid-

ered as a continuous process oriented towards placing

current experiences (cues) in a frame of references deter-

mined by past experiences (Cramer et al., 2006). The concept

of sensemaking will be further elaborated below when we

explain our research question.

This article develops as follows. The f‌irst section high-

lights the confusion surrounding the various concepts

concerning corporate governance, CSR, and business ethics,

and the lack of consistency in the use of these concepts. The

second section formulates the research question and the

objective of this exploratory study. The third section deals

with the methodological issues, the research design, and the

sample. The empirical results are summarized in the follow-

ing section. The f‌ifth section discusses the results. Implica-

tions for practitioners also are highlighted. The sixth section

indicates the limitations of this study and possibilities for

further research. Concluding remarks are made in the f‌inal

section.

THE CONFUSION ABOUT THE DIFFERENT

CONCEPTS CONCERNING CORPORATE

GOVERNANCE, CSR, AND BUSINESS

ETHICS

Despite the fact that the concepts of corporate governance

and CSR have evolved in parallel, both concepts started

from different origins and have developed along separate

lines. Corporate governance emanated from the sharehold-

er’s perspective, with shareholders increasingly calling for

transparency and accountability, which exerted pressures

on product and capital markets (Zattoni and Cuomo, 2008).

CSR arose from other stakeholder groups, such as workers

and customers. Civil society and pressure groups also

called for CSR as the globalization of the world’s economy

created new social and environmental demands, such as

the need to justify the license to operate and a call for

greater accountability, information, and communication. As

such, the expanding introduction of corporate governance

and CSR within the business world can be seen as corpo-

rate responses towards various critiques from different

sides. Corporate governance thus is focused somewhat

towards the internal organization and to the relationship

with the board of directors. CSR, on the other hand, has its

origins principally outside the company and is concerned

with how the company affects its stakeholders, the con-

stituents, and the environment. However, both concepts

have an ethical component. In this sense, many corpora-

tions explicitly refer to ethics in their corporate governance

and in their CSR statements and publications. The link

between corporate governance and corporate ethics also

has been emphasized in the f‌inancial press (White,

2002).

Confusion About the Different Concepts

As highlighted above, the explosion and diffusion of various

concepts and def‌initions have led to increasing vagueness

and ambiguity. Such confusion has occurred at both the

academic and corporate levels.

Conceptual Confusion in the Academic Literature. The

academic interest in certain business and society-related

issues was developed after business itself had identif‌ied a

problem. In particular, corporate governance was f‌irst taken

up by leading companies, off‌icials, and consultants. It was

practitioners who wrote the f‌irst articles on corporate gov-

ernance in academic journals (Cadbury, 1987). Similarly,aca-

demics paid attention to business ethics (e.g., Epstein, 1987;

Vogel, 1991; Carroll and Buchholtz, 2006). Since these begin-

nings, over 100 proposed concepts have described how

ethical issues in business should be def‌ined (Van Marrewijk,

2003; Egels, 2005). Following the f‌inancial scandals of the

late 1990s, codes of conduct for corporate governance (e.g.,

Cadbury in the United Kingdom, Tabaksblat in the Nether-

lands, and Lippens in Belgium) have been introduced (S.N.,

2004; Zattoni and Cuomo, 2008), while the academic world

has discovered a new discipline.

On the one hand, a number of recent articles in the busi-

ness and society literature have drawn attention to the inco-

herence and the lack of consistency. On the other hand,

certain similarities in both def‌initions and the use of the

concepts have also been pointed out (Fisher, 2004; Egels,

2005; Dentchev, 2009). “There exist differences but most of

the concepts are fairly similar” (Vogel, 1991: 104). “No core

in terms of content is to be found in any of the concepts”

(Egels, 2005: 25). Garriga and Melé (2004) similarly consid-

ered that the terms were utilized in different interpretations,

with different breadths and scopes.

For example, although CSR and corporate governance

developed along separate lines, some complementarities

have been observed (Lea, 2004; Beltratti, 2005; Van den

Berghe and Louche, 2005; Aguilera, Williams, Conley and

Rupp, 2006). In this sense, Jamali, Saf‌ieddine and Rabbath

(2008) demonstrated an increasing overlap in agenda,

while Beltratti (2005) commented that both concepts are

strongly related to, and lead to an increase in, the market

value of a f‌irm. Other researchers went further and started

to integrate corporate governance and CSR based on the

premise that good corporate governance provides the foun-

dations for good CSR (Aguilera, Rupp, Williams and Gana-

pathi, 2007). Sacconi (2006) presented CSR as a model of

“extended” corporate governance while, conversely, Luo

(2006: 211) saw CSR as an important part of corporate gov-

ernance. Conley and Williams (2005: 31) stated that “the

CSR-movement can also be interpreted in what has been

called ‘new governance.’ ”

574 CORPORATE GOVERNANCE

Volume 17 Number 5 September 2009 © 2009 TheAuthors

Journal compilation © 2009 BlackwellPublishing Ltd