CSR governance and departmental organization: a typology of best practices

• Date: 01 February 2016
• DOI: https://doi.org/10.1108/CG-01-2015-0010
• Pages: 211-230
• Published date: 01 February 2016
• Author: Irina Lock,Peter Seele
• Subject Matter: Strategy,Corporate governance

CSR governance and departmental

organization: a typology of best practices

Irina Lock and Peter Seele

Irina Lock and Peter

Seele both based at the

Institute of Marketing and

Communication

Management, Universita

`

della Svizzera Italiana,

Lugano, Switzerland.

Abstract

Purpose –This paper aims to study the state of the art of corporate social responsibility (CSR)

governance and operational structure within the most sustainable companies to arrive at a typology of

CSR organization. Whether companies consider corporate social responsibility (CSR) a strategic

management task is mirrored in the department and governance structure of CSR.

Design/methodology/approach –By conducting a web content analysis, the authors apply a “best

practice” approach to examine the vertical and horizontal organization of CSR within the “most

sustainable companies worldwide” (Robeco SAM, 2013).

Findings –The results show that most corporations have in place governance structures for CSR that

organize it horizontally in stand-alone departments. Three types of CSR organization best practice

emerged: the single-headed, two-headed and infused types.

Practical implications –The paper indicates three different ways that companies can organize CSR

internally. The authors discuss the feasibility of such organization for large and small companies and

their day-to-day business.

Originality/value –The paper addresses the under-researched area of vertical and horizontal CSR

organization at the micro level. The authors analyze the state of the art of organizational and governance

structures of CSR in the most sustainable companies and deduce three types of CSR governance and

operational architecture.

Keywords Organizational structure, Corporate social responsibility, CSR governance

Paper type Research paper

Introduction

Corporate blunders from the past 20 years, such as the Deepwater Horizon disaster or

the Volkswagen emission manipulation scandal, have given rise to discussions about

corporate social responsibility (CSR) and corporate governance (Peters et al., 2011).

Large multinational companies across the globe have therefore started to communicate

about these topics (Kolk, 2008) to foster public trust in their organizations and to

safeguard their license to operate (Donaldson and Dunfee, 2002). However, to be

credible, this communication about CSR must also reflect business practice.

The relationship of words and deeds is crucial in CSR: “[A]ssessing the organizational

integration of CSR in daily business practices and routines is critical for distinguishing

between CSR ‘talk’ and CSR ‘walk’” (Baumann-Pauly et al., 2013, p. 3). Every major

corporate function[1] has a dedicated organizational structure (and budget) that supports

it; for example, human resources is led by a separate department, finance is managed in

auditing or controlling and communications are managed from a public relations function.

Thus, given the strategic role of CSR and its importance for corporate reputation (Fombrun

et al., 2000;Hillenbrand and Money, 2007;Singer, 2013;Haigh and Brubaker, 2010), it

should also be supported by an organizational structure.

Received 22 January 2015

Revised 3 August 2015

18 November 2015

19 November 2015

Accepted 20 November 2015

DOI 10.1108/CG-01-2015-0010 VOL. 16 NO. 1 2016, pp. 211-230, © Emerald Group Publishing Limited, ISSN 1472-0701 CORPORATE GOVERNANCE PAGE 211

Few publications have tackled issues of CSR organizational structure (Klettner et al., 2014;

Asif et al., 2013;Perera Aldama et al., 2009), and these few have illustrated the gap

between theory and practice (Pollach et al., 2012;Morgan et al., 2009;Elving and Kartal,

2012;Strand, 2013;Griffin and Ebert, 2002). Furthermore, practitioners appear to be

uncertain about how best to integrate CSR into companies’ organizational structure

(Business for Social Responsibility, 2002;Boston Center for Corporate Citizenship, 2009).

Hence, academics (Morgan et al., 2009;Pollach et al., 2012) and practitioners (Aldama

et al., 2009) have called for more research on the organizational structure of CSR within

companies. Two levels of organization are considered: the vertical (governance) and the

horizontal (operational) integration of CSR (Kathuria et al., 2007).

Although previous studies tackled questions of CSR governance at a macro level (De Graaf

and Stoelhorst, 2009;Aras and Crowther, 2008;Mason and Simmons, 2014), the micro

level is under-researched (Klettner et al., 2014). A stakeholder approach to corporate

governance suggests that ethical issues should be included in governance structures

(Young and Thyil, 2008) because in that way, awareness of CSR is fostered and its strategic

goals are supported (Mason and Simmons, 2014). However, questions of how CSR is and

should best be governed are still unanswered.

Too little empirical research has been conducted on the way CSR is operationally

structured within corporations (Asif et al., 2013;Perera Aldama et al., 2009). To align with

other corporate functions, CSR can be structured in cross-disciplinary corporate

communication departments given communication’s important role in CSR (Christensen

and Cornelissen, 2011). Alternatively, stand-alone CSR departments can be seen as the

manifestation of CSR strategies within the organization. However, research on the state of

the art of departmental CSR organization is lacking. Thus, practitioners and researchers are

equally confronted with the challenge of how best to implement CSR in organizational

structures (Vallaster et al., 2012).

To study this issue, we took a pragmatic approach and focused on the most sustainable

companies worldwide, that is, the corporations with the best performance in economic,

social and environmental terms (RobecoSAM, 2013). The objective of this study is to

analyze the current best practice of CSR governance and operational organization by

companies that lead in sustainability. By conducting a web content analysis, we aimed to

investigate how the most sustainable companies organize their CSR on the operational and

governance levels. As a result, we present a typology of CSR governance and organization

models that represents the state of the art of CSR governance and organization in today’s

global sustainability leaders.

The paper proceeds as follows: After a literature review that provides an overview of CSR

in today’s organizations and existing research on CSR organizational and governance

structures, we describe the method, sample selection and data analysis. Then, we present

the empirical results on transparency and responsiveness, vertical and horizontal

integration and top management support. From these findings, we develop a typology of

CSR organization leading to the single-headed,two-headed and infused types. These

models are discussed with respect to relevant literature before we conclude the article by

presenting limitations and suggestions for practice and future research.

Literature review

CSR in today’s organizations

CSR is not a management trend or a recent phenomenon (Sahlin-Andersson, 2006), rather

it is increasingly established in today’s businesses. From a stakeholder perspective, CSR

can be defined as “a response to the specific demands of largely external stakeholders,

such as governments, NGOs [non-governmental organizations], and consumer lobby

groups, with regard to a firm’s operations, or with regard to generalized social concerns”

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