Managing Socially-Responsible Buying:

Managing Socially-Responsible Buying:

Pergamon PII: European Management Journal Vol. 20, No. 6, pp. 641–648, 2002  2002 Elsevier Science Ltd. All rights reserved. Printed in Great Brita...

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Pergamon

PII:

European Management Journal Vol. 20, No. 6, pp. 641–648, 2002  2002 Elsevier Science Ltd. All rights reserved. Printed in Great Britain S0263-2373(02)00115-9 0263-2373/02 $22.00 + 0.00

Managing SociallyResponsible Buying: How to Integrate Noneconomic Criteria into the Purchasing Process ISABELLE MAIGNAN, University of Nijmegen BAS HILLEBRAND, University of Nijmegen DEBBIE McALISTER, Southwest Texas State University Companies are increasingly scrutinized by various audiences and are made accountable not only for their internal practices, but also for their suppliers’ behavior. Many purchasing managers and executives are not accustomed to seeing the purchasing function receive so much attention from different parties. As a result, a number of them do not know how to embrace the trend toward socially responsible buying (SRB). The present paper offers a helping hand by (1) shedding some light on the nature of SRB and (2) explaining how companies can incorporate social responsibility criteria into their purchasing decisions.  2002 Elsevier Science Ltd. All rights reserved. Keywords: Corporate Social Responsibility, Corporate Citizenship, Socially Responsible Buying, Purchasing Process, Stakeholder Management ❖ In 2000, the United Nations published an explosive report exposing how De Beers’ diamonds helped finance Angola’s UNITA cruel rebel group. This report led several human rights groups to call for a boycott of De Beers. Negative publicity followed. ❖ Home Depot has seen many of its stores blocked by angry customers who protested against the retailer’s supply of wood coming from endangered tropical forests. ❖ The city of Detroit, backed by federal funding and

local minority defense groups, actively supports firms that rely on minority suppliers. The examples above deal with different types of actors and issues. Yet, they have one common point: they are all examples of organizations being compelled by specific stakeholder groups (the media, customers, investors, local and federal authorities, activists) to incorporate non-economic criteria into their purchasing practices. These three examples are representative of a growing trend whereby businesses are increasingly scrutinized by various audiences, and are made accountable not only for their internal practices, but also for their suppliers’ behavior. While an increasing number of business leaders have recently acknowledged the importance of corporate social responsibility at the firm level, most of them are still uncertain about the implications of this concern for the purchasing function. Even when they recognize the relevance of corporate social responsibility, many purchasing managers do not know how to concretely and systematically include social issues into purchasing decisions. They are used to tackle mainly efficiency and governance issues in their interactions with suppliers, and have little experience with broader, social demands. As a result, most purchasing executives are not sure about the nature and concrete management of socially responsible buying (SRB). This paper provides insights into the meaning

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and practical implementation of SRB by integrating the role of organizational stakeholders in the purchasing process.

What is SRB? In accordance with contemporary views of corporate social responsibility (e.g., Maignan et al., 1999; McWilliams and Siegel, 2001; Rowley and Berman, 2000), SRB can be defined as the inclusion in purchasing decisions of the social issues advocated by organizational stakeholders. In this perspective, stakeholders are the agents that bring broad social demands to the attention of individual firms. While an individual business may not have the resources to consider the impact of its activities on society in general, it may be better able to monitor how its operations affect clearly identifiable stakeholder groups (Clarkson, 1995). Considering specific stakeholder demands instead of broad social issues renders the management of social responsibility more feasible.

Nature of Organizational Stakeholders Stakeholders can be grouped in four main categories (Henriques and Sadorsky, 1999): ❖ Regulatory stakeholder including local and national governments, professional organizations, and competitors. ❖ Community stakeholders including environmental and human rights groups, consumer advocates, and other potential activists. ❖ Media stakeholders. ❖ Organizational stakeholders including customers, employees, shareholders, and suppliers. Noticeably, stakeholders that advocate social responsibility issues can be found both within and outside the organization. As illustrated in Table 1, a Table 1

firm can be pressured to become more socially responsible not only by agents with secondary links to the core business activities (e.g., non-governmental organizations, the media), but also by its own managers, employees, and investors. The examples listed in Table 1 show that stakeholder initiatives may be designed to demonstrate commitment to a particular standard or value, disclose wrong-doing, spread negative images of the firm, change company practices, and/or hinder the proper functioning of the firm. In many cases, corporate leaders themselves have played a leading role in launching decisive social responsibility initiatives in purchasing activities. For instance, Edgar Woolars, the CEO of DuPont between 1989 and 1997, has been recognized with several prizes for his leadership in encouraging green supply chain management and environmental responsibility in his own firm and across the US chemical industry. Some stakeholders may be motivated to call for increased social responsibility in purchasing because their well-being is affected by the firm’s purchasing activities. For example, when Honduran workers contacted US student activists in 1999, they pointed to the effects of their poor working conditions on employees’ health and safety. The damaging impacts were presented as a consequence of US firms’ negligence in controlling the practices of their suppliers. In contrast, other stakeholders advocate specific social responsibility issues even though their wellbeing is not directly affected by corporate activities. For instance, most human rights activists calling for oil companies to stop purchasing Nigerian oil do not live in that country and suffer no consequence of these manufacturers’ supplying decisions.

Nature of Stakeholder Issues Stakeholder issues can be seen as concerns of importance to the groups that have their welfare affected by corporate activities, and to those that have some

Examples of Stakeholder Actions in Favor of SRB

Action instigated by:

Example

Employees

Employees of garment suppliers in Saipan regrouped themselves and launched legal actions against large US apparel manufacturers in the mid-1990s in protest against harmful working conditions. They also contacted the media that helped advocating their cause. Consumers demonstrated outside of Eddie Bauer’s stores to protest against alleged human rights abuses perpetrated by one of the firm’s Mannyar suppliers in 1998. These protests received much media attention. Ethical investment funds such as Franklin Research claim that they withdraw their investments from firms that do not include human rights in their purchasing policies. The US government introduced the Bonded Child Labor Elimination Act of 1997, a law banning the import of goods made with bonded child labor. Hong Kong’s Asia Monitor Resource Center, a human-rights organization, published reports in 1999 on the working conditions at Disney’s suppliers. The report was then echoed in the US press. In 1994, an episode of the US TV show ‘Eye to Eye’ nailed Adidas for child labor practices. This triggered the company to become a leader in changing labor practices industry-wide.

Consumers

Investors Government Non-governmental Organization The media

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means of impacting corporate operations (Clarkson, 1995). Among the purchasing-related issues that have often been advocated by stakeholders, there are four predominant themes: ❖ The respect of human and workers’ rights by suppliers. Likely concerns include working conditions, child labor, bonded labor, and violations of workers’ rights. ❖ The respect of local democratic institutions. This issue arises when companies purchase goods from entities that are not acknowledged by, or even operate against, established democratic institutions. ❖ The protection of natural resources. This concern is most evident when suppliers’ practices are known to be detrimental to the natural environment and when the purchasing company does not favor green suppliers. ❖ The use of minority suppliers. This issue is most prevalent in the US and designates the expectation that purchasing companies seriously consider a diversity of suppliers in terms of racial background, gender, and size. These four themes are found within the majority of news articles, industry initiatives and other stakeholder communications related to SRB. Therefore, organizations dedicated to SRB will systematically ensure that their buying decisions have a positive effect on these prominent stakeholder issues.

SRB Strategies and Practices Various strategies are employed by businesses when faced with specific stakeholder demands. These strategies can be positioned along a continuum ranging from proactive to reactive approaches (see Table 2). An organization reactive in terms of SRB rejects the social duties assigned by its stakeholder groups. Such Table 2 SRB Strategies 앴 Reactive Strategies Denying the relevance of any stakeholder issue to the organization; denying that the firm has stakeholder responsibilities. When Nike was first accused of dealing with suppliers that used child labor in the mid-1990s, the company claimed that it was not in the business of manufacturing shoes, and that it could therefore not be blamed for the practices of East-Asian manufacturers.

a business systematically resists stakeholders’ calls for a greater scrutiny of suppliers’ practices. In contrast, a proactive organization in terms of SRB systematically anticipates and meets stakeholder demands. As illustrated in Table 2, SRB strategies are likely to evolve over time, often as a result of increased stakeholder pressures.

SRB Strategies are Issue Specific Noticeably, the SRB strategies adopted by a given firm may not be uniform for all stakeholder issues: a given firm may be quite proactive with respect to green buying, but may at the same time be reactive when it comes to minority purchasing. For example, in the mid-1990s, B&Q, a British do-it-yourself retailer, increasingly adopted a proactive strategy with respect to environmental issues facing the purchasing function. This strategy was implemented with processes such as surveys of stakeholders, establishment of environmental objectives for each supplier, and the regular auditing of supplier practices. Yet, the retailer’s purchasing function still ran into difficulties when the press revealed that some of B& Q’s suppliers were relying on child labor. While the company had become a corporate leader in terms of environmental practices, it had remained quite reactive with respect to labor rights issues. Consequently, businesses must determine the nature of their SRB strategy for each stakeholder issue that is associated with the purchasing function.

Proactive SRB in Practice Concretely, the more proactive the SRB strategy, the more initiatives undertaken by the firm to meet stakeholder demands. The following practices are significant of a proactive stance toward SRB: Defining social responsibility goals for the purchasing

앸 Defensive

Accomodative

Implicitly acknowledging the existence of stakeholder issues, but avoiding to address these issues.

Addressing stakeholder issues as long as they do not impair established organizational processes and financial performance. Following media criticism, Nike Next, Nike started introducing publicized a report claiming workers’ rights and that the employees of its environmental guidelines for its Indonesian and Vietnamese suppliers. Yet, company suppliers were living quite well. representatives kept on The veracity of this report was explaining that any additional tarnished by contradictory social responsibility initiative evidence produced by local would damage the competitive activists. position and long-term survival of the firm.

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Proactive Strategies Systematically anticipating, surveying, and addressing stakeholder demands.

In the late 1990s, Nike designed a suppliers’ auditing process which invited student representatives along with other activities to visit manufacturing plants and provide recommendations for better practice.

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function. For example, US Steel strives to be categorized as a ‘world class’ organization by the national Minority Supplier Development Council by spending at least 6 per cent of its annual purchasing dollars with minority suppliers. Similarly, DaimlerChrysler has set the objective of having 30 per cent of its plastic supplies recyclable by 2002. Designating organizational members in charge of SRB. The objective here is to ensure that one or more individuals are accountable for the progress of the purchasing function. Nike ended up taking this step after consumer rallies and boycotts multiplied while sales slumped. The shoe manufacturer created the position of Vice President for Corporate and Social Responsibility in 1998. Educating suppliers. Even though this initiative may not always be necessary, education and training programs can be decisive in gaining suppliers’ support and spreading SRB practices in a given industry. The Belfast City Council offers workshops to help local suppliers become greener; key account managers then meet with suppliers on a monthly basis to provide support and help their progress on environmental goals and outcomes. Similarly, Fetzer Vineyards has developed a training program to help growers cultivate organic grapes. Monitoring suppliers. The purchasing organization regularly surveys its suppliers’ practices relative to set social responsibility goals. Some companies undertake this monitoring process themselves. For instance, Hewlett-Packard has developed a quantitative supplier rating system that evaluates suppliers’ environmental practices. More proactive companies involve stakeholders in the monitoring process. In cooperation with a university and non-governmental organizations, Mattel set up a monitoring council in charge of surveying suppliers’ working conditions in 1998. Under this program, independent auditors visit factories at least three times a year. Sanctioning suppliers. In order to be taken seriously, SRB practices must include well-defined sanctions for suppliers failing to meet stated criteria. For instance, the British government introduced a rule in 2000 whereby firms found guilty of environmental offenses cannot be considered as potential suppliers. Communicating achievements to stakeholders. Businesses use diverse means to let stakeholders know about their social responsibility achievements in the purchasing function. One approach is to have buying practices certified as responsible by an established authority. Companies such as Avon and Toys R’ Us have received the Social Accountability 8000 certification which guarantees that the organization and its suppliers meet verifiable standards in terms of labor rights and discrimination. Other companies attach to their products a label signifying responsible practices. Such a label has been introduced by the Fair 644

Labor Association (a White House-backed taskforce regrouping several apparel firms) to signal to consumers that goods are not produced in sweatshops. Yet other companies publicize the evaluations of their purchasing activities conducted by independent auditors. This is the approach favored by The Body Shop. The company makes the unedited and independent audit of its practices (including its purchasing activities) available on its website. Receiving stakeholders’ feedback. Proactive companies try to get stakeholders’ evaluation of their progress in specific issues. For example, B&Q organizes biannual conferences with stakeholders including suppliers, store managers, and local authorities. Another approach has been favored by Shell: the oil manufacturer has an on-line survey where visitors are asked to evaluate Shell practices. The unedited results are also available on-line. Even though proactive SRB strategies may seem desirable, all firms do not adopt them. Many businesses lack the resources necessary to gather intelligence on stakeholder expectations, to develop wellstructured SRB strategies, and to implement them. Other companies lack top management concern or commitment to SRB. SRB activities require substantial investments in supplier selection, monitoring, labeling, training, and may demand the reliance on more expensive suppliers. Therefore, purchasing managers have to determine how proactive their purchasing strategies must be, and thus the range of SRB initiatives they should develop.

Which Level of Proactiveness? The selection of a SRB strategy is based on a trade off between the associated costs and the motivations underpinning proactive strategies. Three main factors stand out in favor of proactive strategies: (1) stakeholder pressures, (2) organizational values, and (3) concrete business benefits.

Stakeholder-driven SRB Stakeholder power. Stakeholders may be so powerful that organizations are forced to comply with their demands. Most stakeholders have power over a firm because they have access to normative (symbolic), utilitarian (material), and coercive (using physical violence or restraint) means of imposing their will on the organization (Etzioni, 1964). Normative power has often been displayed by stakeholders with letterwriting campaigns, protests, and negative publicity. ‘Hate websites’ have become a popular way for consumers to expose or protest the business practices of large and well-known companies. Such actions aim mainly at enhancing other stakeholders’ awareness of issues and at spreading negative images of irres-

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ponsible firms. Utilitarian power, including boycotts, lawsuits, and new regulations, is also quite common. Utilitarian means often accompany or follow symbolic initiatives. For example, the US federal government passed the Bonded Child Labor Elimination Act only after the media and activist groups exposed widespread labor abuses in the apparel industry. Coercive power has been more rarely employed. Yet, protestors who believed McDonald’s beef suppliers were destroying rainforests to develop cattle land used arson to damage McDonald’s restaurants in Belgium. As stakeholders have access to a variety of means to use these different forms of power against the organization, the purchasing firms become less and less able to justify a reactive stance and a lack of concern for social responsibility issues.

information coming from its competitors, who themselves fear any additional transparency. Thus, in the case of this recent oil spill, TotalFinaElf has been able to reject any responsibility, while assigning all faults to the oil carrier. Overall, the power of stakeholders is determined by: (1) the extent to which they have recourse to normative, utilitarian, and coercive means of disturbing corporate activities, and (2) their ability to communicate with one another and to coordinate their advocacy. Therefore, companies are best able to utilize reactive SRB strategies when their operations cannot be affected significantly by stakeholder actions, when they can keep the allegiance of key stakeholder groups, and when they can limit the information flows among various stakeholders.

Stakeholder collaboration. Stakeholders are more likely to be powerful relative to the firm if they can find allies that also call for more proactive SRB. Therefore, Value-driven SRB the more ties that exist or can be created among stakeholders, the more vulnerable is the firm. This To this point, the discussion has presented SRB as a idea can be illustrated with IKEA’s experience. After set of practices adopted by businesses as a result of a Swedish TV show aired a 1994 documentary allegstakeholder pressures. Yet, even when companies do ing that IKEA was selling handnot face observable stakeholder woven carpets produced by pressures in favor of SRB, they It is therefore essential children under appalling conmay embrace proactive straditions, different stakeholder tegies because their organizathat businesses formalize groups (including the press, tional values dictate responlabor representatives, conbusiness practices. Indeed, values and principles whose sible sumer and human rights values underpin the organizaactivists) started investigating tion’s functioning and provide implementation is doable the retailer’s practices and its members with norms definincreasingly called for coning appropriate business sumer boycotts and demonstrations. Such contagion behavior (Deshpande´ and Webster, 1989). In many effects and collaboration among stakeholders make it cases, broad organizational values translate into clear very difficult for businesses to ignore their social principles guiding purchasing operations (see Table responsibilities. 3). Levi Strauss & Co. provides a good example of a company whose proactive SRB strategy is mainly value-driven. Since its founding years, Levi Strauss In contrast, when a firm holds a central position in committed his firm to actively contributing to the the network of stakeholders, it is able to minimize community’s welfare. One result of this long-standstakeholder interactions and the flow of information ing commitment was the guidelines for global sourcregarding its practices. Then, the firm can ward off ing operations that the clothing manufacturer introstakeholder pressures and stick to a reactive SRB duced in 1991. The company did not wait for strategy. TotalFinaElf provides an example of a firm activists’ campaigns against child labor in the apparel that has been able to bypass more proactive social industry to integrate this issue into purchasing pracresponsibilities by controlling the information flows tices. Similarly, the retailer Nordstrom has long been between stakeholders and by exploiting its privileged dedicated to stimulating racial diversity. As a result, ties to specific stakeholders. The oil company has its purchasing function encourages minority supbeen under attack by many environmental groups pliers. since the accident of one of its oil transporters led to an ecological disaster in France. One contributing While it may seem desirable to adopt a proactive SRB factor to TotalFinaElf’s firm stance has been its strong strategy, even when not pressured to, committing to ties with government representatives: many of its top corporate social responsibility may make the firm managers are former government leaders. As a result, more vulnerable to additional stakeholder claims. the oil manufacturer has successfully buffered itself Consider the case of B&Q: when the retailer’s from more demanding regulations and has limited environmental practices were first condemned by the any leakage of information originating from the media in the early 1990s, the firm had to respond French administration. Similarly, little is known promptly to the accusations. Indeed, B&Q’s mission about the firm’s activities mainly because it has estabalready incorporated environmental objectives, and lished privileged relationships with local governgreen labeling had been introduced. Therefore, the ments. Further, TotalFinaElf has been able to limit the European Management Journal Vol. 20, No. 6, pp. 641–648, December 2002

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Table 3

Examples of Organizational Values and Purchasing Principles

Company Corporate Values

Purchasing Principles

Levi’s

Empathy, originality, integrity and courage

‘Integrity includes a willingness to do the right thing for our employees, brands, the company and the society as a whole, even when personal, professional and social risks or economic pressures confront us. (…) [We developed] a comprehensive code of conduct to ensure that individuals making our products anywhere in the world would do so in safe and healthy working conditions and be treated with dignity and respect.’

Saks

Style, quality, integrity, and service

‘Saks Incorporated is committed to legal compliance and ethical business practices in all our operations worldwide and is firm in our resolve to do business only with those suppliers we believe share that commitment. In our purchase contracts, we require our suppliers to comply with all applicable laws and regulations mandated by the country in which the merchandise is manufactured, including, but not limited to, laws against child labor, forced labor, and unsafe working conditions. If it is found that a factory used by a supplier for the production of our merchandise has committed legal violations, we will take appropriate action. (…) An appropriate authorized executive representing each of our suppliers must sign a compliance form agreeing to abide by our Code of Conduct.’

B&Q

‘“Being a better neighbor” ‘All virgin wood bought by B&Q will come from forests of known location where the to the local and global supplier has given us sufficient reassurance that the forest is well managed and communities we touch.’ independently certified as such. Certification must include the ability to trace the wood from the forest to the final processor with certified “chain of custody”. B&Q recognizes that FSC currently has the best available standards and certification procedures and so will only buy products certified under the FSC scheme.’

Mattel

‘Mattel regards the thoughtful management of the environment and the health and safety of our employees, customers, and neighbors as one of our highest priorities and a key element in our sound corporate responsibility.’

‘Detailed manufacturing standards have been developed for each of the countries in which Mattel conducts the majority of its manufacturing operations, and where the majority of its contractors are located. (…) They serve as the criteria according to which Mattel’s internal and independent monitoring programs operate around the world. While the development of a code of labor and manufacturing principles is essential to success, enforcement of the code is equally important. At Mattel, we have initiated an extensive three-stage auditing process-which is overseen by an independent monitoring council-to thoroughly inspect the company’s owned-and-operated facilities around the world, as well as those of our contractors. If a contractor facility is either unable or unwilling to work with Mattel in order to meet and maintain its standards, Mattel will discontinue the working relationship.’

Source: websites of the companies mentioned

media criticisms could potentially harm the emerging reputation of the firm as an environmentally responsible one. Since this firm had publicized its commitment to corporate environmental responsibility, it could not ignore stakeholder claims that it did not live up to its promises or that it should improve its practices even more. Not responding to these claims could severely damage the image of the firm. In contrast, an organization that has never displayed much dedication to social responsibility is less likely to be accused of not meeting its social duties, and has less to lose in terms of reputation and image. In other words, the road towards a proactive SRB strategy is a one-way road, where it is difficult to stop, let alone turn around and go back. It is therefore essential that businesses formalize values and principles whose implementation is possible.

Performance-driven SRB While organizations may opt for a proactive SRB strategy because of their organizational values or 646

because of stakeholder pressures, such a strategy may also be chosen because of its likely business benefits. Given its organizational and financial costs, an assessment of these benefits may be key to selecting the most appropriate SRB strategy. Organizations may leverage their SRB initiatives in many different ways. Some of them are outlined below. No negative publicity. The first outstanding business benefit is to avoid the negative consequences of stakeholders’ advocacy, including damage to corporate reputation and negative consumer perceptions that may lead to lower sales. IKEA, Nike, Eddie Bauer, The Gap, Disney, and Liz Claiborne are all highly cultivated brand names whose image has been darkened because of suppliers’ involvement in child labor. Shell, B&Q, Home Depot, and Burger King provide examples of companies that have been the targets of consumer backlash because of their apparent lack of concern for environmentally responsible purchasing. Even though all these companies were sufficiently resourceful to recuperate from stakeholders’ wrath, they have seen their investments in

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brand equity spoiled by negative publicity, and have had to use significant means to re-build their corporate reputation. More innovations. A second benefit may be the stimulation of innovation: in the process of seeking alternative suppliers and supplies, businesses are quite likely to uncover improved manufacturing processes and new marketing opportunities. This positive outcome of SRB was experienced by Patagonia, the manufacturer of outdoor clothing and accessories. While the company adopted clear environmental principles, its purchasing managers systematically sought those companies that could supply recycled inputs. They did find appropriate suppliers, but the recycled inputs could not be used in Patagonia’s existing products. The firm’s engineers then worked on the development of new fabrics that could be based solely on the green supplies found. This effort led to the creation of a new outerwear material that was later marketed as environmentally friendly and accompanied by a price mark-up. Therefore, Patagonia’s commitment to environmentally friendly buying led to a new product and market positioning. Marketing the organization. SRB may also help to market the firm to its customers. Indeed, SRB may help create a special bond between the firm and its customers. For example, the customers of the Dutch coffee brand Max Havelaar are very loyal to this brand because the company is committed to encouraging small suppliers in developing countries. When purchasing Max Havelaar, consumers may have the feeling that they are not only buying a product, but also enacting their concern for poverty. This likely benefit of SRB may also explain largely why large US automobile manufacturers increasingly seek minority suppliers. Ford and General Motors respectively spent $3.5 and $2.3 billion with minority suppliers in 2000, and both companies continue to increase this spending level (Hannon, 2001). Industry leaders indeed believe that minority customers are more likely to select companies that support the minority community in general. Since minority car buyers have and will continue to increase in the next few years, the Detroit automotive giants see their minority supplier programs as an excellent way to build a bond to their customer base. However, stakeholders may end up sanctioning companies that attempt to turn a certain issue into a marketing advantage. For example, Reebok has received negative publicity for using human rights as a marketing argument to sell its soccer balls. Reebok was one of the 55 brands to join a coalition committed to ending child labor. But Reebok was the only company to bring the human rights story to consumers on its packaging and in a national advertising campaign. Reebok was accused of violating the spirit of the coalition’s agreement and its motivation to engage in SRB were openly questioned. Therefore, while customers may encourage firms committed to outstand-

ing social issues, they may be critical of companies that obviously use SRB for self-promotion purposes. Greater organizational commitment. SRB may also be seen as an instrument to increase the organizational commitment of employees to the firm. When engaging in SRB, the firm displays concern for issues (such as the preservation of the environment or human rights) that may be of much concern to employees. Organizational members may appreciate the firm’s efforts and feel proud to work for such a caring organization. Therefore, when properly communicated internally, SRB initiatives may be an excellent way to create a bond between the firm and its members on the basis of common concerns and values. A case in point is again Patagonia: the apparel manufacturer has used its dedication to environmental responsibility and purchasing as an important message when recruiting young graduates. Ford executives also see minority supplying as a good way to enhance the commitment of its increasingly diverse workforce.

Steps Towards Proactive SRB The discussion above suggests that the development of sound purchasing practices respectful of corporate social responsibilities is based on six consecutive steps: 1. Assessing stakeholder pressures. Managers should first establish where the organization stands in relation to its stakeholders and which issues are of greatest concern to stakeholders. At this stage, answers should be provided to the following questions: How powerful are our stakeholders? To what extent can they coordinate their actions? What are purchasing-related issues of most relevance to these stakeholders? The more powerful the stakeholders, the more difficult it is for the firm to avoid tackling the issues they care for. 2. Clarifying purchasing policies based on organizational values. Business leaders should establish the extent to which organizational values have implications for the purchasing function. Based on these values, the company may design clear purchasing principles independently of any stakeholder pressure. 3. Estimating potential business benefits and costs. Since proactive SRB strategies may also have concrete business benefits, managers should make an estimation of these benefits to be able to take them into account in the decision to be made in the next step. Likewise, an estimation of the costs of implementing a SRB strategy should be made. 4. Choosing a SRB strategy. When corporate values include certain social objectives, the firm is obligated to endorse a proactive SRB for the issues most valued. If principles are not sufficient to determine which strategy to use, managers should assess the firm’s capacity to resist stakeholder pressures at a minimal cost, especially by con-

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sidering stakeholders’ power along with the firm’s ability to minimize collaboration among stakeholders. The choice of the most adequate strategy should integrate the potential returns of SRB along with its estimated costs. 5. Implementing SRB practices. As earlier discussed, the more proactive the strategy, the more processes should be employed by the firm, and the greater the stakeholder involvement in these processes. Proactive SRB should regularly monitor stakeholders’ evaluation of the purchasing process and should integrate this feedback into buying principles, strategies, and practices. 6. Leveraging SRB. Finally, organizational leaders can determine whether they want to attempt to leverage their responsible purchasing practices by marketing them internally or externally. SRB is relatively new to the business world and it may therefore not be surprising that managers do not know what it really is and how to deal with it. Yet, for many firms, proactive SRB has become an imperative in order to avoid stakeholder pressures and negative publicity. For more and more companies, proactive SRB is also an imperative because it is the

concrete expression of corporate values. Regardless of their motivations, businesses may also welcome SRB as a creative way to market the organization to diverse stakeholder groups. References Clarkson, M.B.E. (1995) A stakeholder framework for analyzing and evaluating corporate social performance. Academy of Management Review 20(1), 92–117. Deshpande´ , R. and Webster, F.E. Jr. (1989) Organizational culture and marketing: defining the research agenda. Journal of Marketing 53(January), 3–15. Etzioni, A. (1964) Modern Organization. Prentice Hall, Englewood Cliffs, NJ. Hannon, D. (2001) Big three boost diversity buy. Purchasing 9, 31–38. Henriques, I. and Sadorksy, P. (1999) The relationship between environmental commitment and managerial perceptions of stakeholder importance. Academy of Management Journal 42(1), 89–99. McWilliams, A. and Siegel, D. (2001) CSR: a theory of the firm perspective. Academy of Management Review 26(1), 117– 127. Maignan, I., Ferrell, O.C. and Hult, G.T.M. (1999) Corporate citizenship: cultural antecedents and business benefits. Journal of the Academy of Marketing Science 27(4), 455–469. Rowley, T.J. and Berman, S. (2000) A brand new brand of corporate social performance. Business & Society 39(4), 397–412.

ISABELLE MAIGNAN, University of Nijmegen, School of Management, P.O. Box 9108, 6500 HK Nijmegen, The Netherlands. E-mail: [email protected]

BAS HILLEBRAND, University of Nijmegen, School of Management, P.O. Box 9108, 6500 HK Nijmegen, The Netherlands. E-mail: [email protected]

Isabelle Maignan is Associate Professor of Marketing at the University of Nijmegen School of Management. Her research interests focus on the concept, implementation, and marketing impacts of corporate responsibility.

Bas Hillebrand is Associate Professor of Marketing at the University of Nijmegen School of Management. His research interests include product management, market orientation, corporate responsibility and inter-organizational co-operation.

DEBBIE THORNE McALISTER, Department of Marketing, College of Business Adminstration, Southwest Texas State University, 601 University Dr., Derrick Hall 226, San Marcos, TX 78666, USA. E-mail: [email protected] Debbie Thorne McAlister is Chair of the Department of Marketing at Southwest Texas State University. She has published on business ethics and corporate citizenship. A recent book is Business and Society: A Strategic Approach to Corporate Citizenship (coauthor), published by Houghton Mifflin.

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