“If a tree falls in the forest and no one is around to hear it, does it make a sound?” and, paraphrasing the proverbial philosophy question, if a company has a strong CSR commitment but nobody recognizes it, does it produce any benefits? Business returns from corporate social responsibility (CSR) practices, such as customers loyalty and company reputation, depend heavily on how stakeholders perceive the company social behavior, making the measure of stakeholder perception a key issue in the process of CSR assessment. In this paper the analysis of CSR activities, as perceived by stakeholders, is realized utilizing global reporting initiative (GRI) indicators structured under balanced scorecard (BSC) perspectives and sustainability dimensions. We utilize a multi-criteria approach combined with fuzzy linguistic variables, in the variation of the 2-tuple, creating a hierarchy of CSR components with the purpose of integrating financial and non-financial sustainability dimensions and strategic perspectives. The hierarchy provides a multidimensional model that allows to evaluate the multifaceted social behavior of a company: the same company can be perceived simultaneously as responsible or irresponsible depending on the considered dimension and perspective.
The enterprise is an organ of society and its management has to consider the impact of every business decision in order to promote the public good and to contribute to society strength and harmony (Drucker, 1954): this is what CSR is about. In an era where planetary emergencies and need for social justice are increasing, CSR can help companies to find a way to realize real sustainable businesses in view of their central role in the global economic and financial stability. In this respect, CSR is a business approach that considers how firm activities impact on society and that companies have a broader range of obligations besides economic and financial ones, taking into account also legal, ethical and philanthropic responsibilities (Carroll, 1979, Carroll, 1991, Carroll, 1999 and Van Marrewijk, 2003). Therefore, CSR involves not only the business and the economic dimensions, but also the social and the environmental ones, in a way that aims to benefit the people, the communities and the overall society (ISO, 2002). Following this lead, “the triple bottom line” (Elkington, 1997) or “triple Ps” (profit, people and planet) managerial orientation aims to measure the financial, the social and the environmental performances of a company over a period of time, considering that when companies measure their social and environmental impacts, they progressively become socially and environmentally responsible organizations (Hindle, 2008). For these reasons, a new multidimensional approach is necessary in order to evaluate a company CSR, according to the economic, the environmental and the social issues that a company has to face in the Modern Economy (Menguc and Ozanne, 2005, Sharma, 2000 and Wood, 1991).
A social responsible behavior should benefit a company in many ways, like customer loyalty or a good reputation. On this behalf, some studies (Becker-Olsen et al., 2006, Greening and Turban, 2000, Peterson, 2004 and Turban and Greening, 1996) highlight how the stakeholder perception of a responsible behavior influences the possibility to obtain benefits from CSR practices, to the point that the measure of CSR perception becomes a key issue in the process of CSR assessment. Moreover, stakeholder orientation mitigates a company irresponsible behavior and offers guidelines to decision-makers for CSR management (Armstrong, 1977). For these reasons, CSR measurement cannot neglect the stakeholder perception of the company CSR commitment, since the return on CSR investments is strictly linked to the public recognition of the company social responsible behavior. Nevertheless, CSR literature lacks of state-of-the-art solutions to this problem.
To this aim, we propose a methodology that considers the unavoidable subjectivity of perception measurement by utilizing a fuzzy logic approach for linguistic variables, in the variation of 2-tuple (Herrera & Martinez, 2000). With the purpose of assessing CSR activities, we hierarchize GRI indicators under BSC strategic perspectives and sustainability dimensions, through a Multiple Criteria Decision Making approach (MCDM).
The paper is organized as follows: a critical review of CSR measurement methods (Section 2) is followed by a discussion about the stakeholder centrality in CSR assessment (Section 3), then a methodology for CSR evaluation through stakeholder perception is presented (Section 4) and applied to a real case study (Section 5), finally conclusions are discussed (Section 6).
Stakeholder orientation offers guidelines in understanding CSR behaviors, recognizing the influence of stakeholder perception in CSR assessment. In fact, many studies demonstrate that business returns from CSR activities, such as customer loyalty and image improvement, depend greatly on how stakeholders perceive the company CSR commitment. Despite the relevance that literature recognizes to stakeholder perception of CSR activities, there are not specific approaches and methods for its assessment.
Following this lead, in the paper we focus on the central role of stakeholders in CSR evaluation and we propose a methodology integrating GRI indicators, BSC strategic perspectives and sustainability dimensions through a MCDM approach. The proposed methodology considers the unavoidable subjectivity of this kind of measure by utilizing a fuzzy logic approach for linguistic variables, in the variation of 2-tuple, that overcomes lack of precision and loss of information, typically involved in the linguistic evaluation processes.
The output of the methodology is the performance of the Economic, Environmental and Social sustainability dimensions of the company CSR activities, as perceived by its stakeholders. Moreover, it is possible to assess the perception of the importance and the performance of GRI indicators and BSC perspectives. The analysis of the gap between importance and performance puts in evidence the differences between the stakeholder perception of the company CSR activities and the ideal level of CSR commitment. The results obtained should demonstrate an alignment (or lack of it) between what stakeholders consider as important and what they observe in the company. The methodology can be applied to any industry and it can involve internal stakeholders (managers, employees, etc.) and/or external stakeholders (customers, suppliers, partners, etc.).
We apply the method to a cooperative company committed in social responsibility practices to underline how a company should use this methodology to identify the weaknesses of its CSR practices, both in terms of commitment and communication. In fact, a low performance (as perceived by stakeholders) could be caused by a scarce commitment in CSR activities and/or by an inadequate capacity of the company to communicate its CSR initiatives.
Finally, some companies behave responsibly on some dimensions while acting irresponsibly on some other ones: the multidimensional approach allows us to measure the different aspects of the company CSR commitment. The paper gives both academic and practical insights that could be used for the operational and strategic CSR management. Actually, the outcome of the application provides companies directions for progress, that should constitute the basis for the formulation of future CSR strategies. In fact, the results of the analysis offer to company managers guidance to what area should be object of focused CSR investments, in order to improve the level of CSR commitment and its perception by stakeholders. In order to combine different CSR perspectives, managers can engage in the analysis different types of stakeholders for each dimension: employees and managers, as internal stakeholders, can better perceive the inner CSR dynamics, while customers, suppliers and community members, as external stakeholders, are likely to grant a more truthful recognition of the outer CSR conduct of the company.
