How could the adoption of Corporate Social Responsibility help in the achievement of Business Sustainability?
A case study of Nike
Chapter 1: Introduction
1.1 Research Background
Increasingly, firm’s role is not purely offering the goods and services needed by consumer and does not create a sustainable strategy for the firm itself. Their role has extended toward being accountable and responsible during the conduct of the value creation and value chain building process. Consumer’s perception on values is not wholly-on the tangible benefits, but the intangible benefits derived from the goods and services consumption, such as the positive emotion obtained from purchasing from firm that conduct ethical business practices and at such devote themselves to be a highly social responsible company. Corporate social responsibility is a term used by as the effort to build value bundle to enhance its image in the consumer’s, stakeholders, employees, and the community mindset.
The rationale for the research of the topic ”How can the adoption of Corporate Social Responsibility help in the achievement of Business Sustainability” is that although there are many evident clearly shown the increasing adoption of the corporate social responsibility practice in today’s business environment, however not many of the business believes that corporate social responsibility could help in the achievement of business sustainability. Corporate social responsibility practice is believed to be use for building a good brand image and good reputation for the business. Whether the addressing of this attribute could be used to create inexhausted benefit for the firm, it is still a blur understanding. Hence, the main purpose of this study is to find the direct correlation between corporate social responsibility and business sustainability, in order to convince whether or not corporations should adopt corporate social responsibility to achieve its sustainable business growth and why is it necessary for a business to practice corporate social responsibility.
Regardless of the success of the multi-nationals, whether in term of revenue growth and brand recognition, corporate social responsibility becomes an attribute firm cannot overlook during the crafting of the corporate strategy. Nike is not an exception toward the challenges that corporate social responsibility can prevailed toward the company’s continuous success especially giving the strong brand awareness Nike presents in the footwear industry. Strong brand recognition allows the firm to expand and increase sales, yet it comes with a price when deficiency of the business operation arises. Indeed, it was Nike’s negative publicity and its stagnation in sales in the last decade that has brought greater interest and signified as an alarm on how insufficiency in addressing corporate social responsibility could ruin the company’s success. It is a lesson that failures to act socially responsible come in not just a current price tag to pay, but a price that will take significant efforts to tackle the damages it has caused. A case study of Nike will be used in this research to exploit the key issues discussed above.
1.2 Organisational Background
Nike Inc. is an American company that provides an athletic sportswear, sport equipments, sport digital devices, accessories including bags, eyewear, timepieces, protective equipments and footwears. They also wholly owned subsidiaries brands such as Jordan, Hurley, and Converse. The headquarter of Nike is in Washington County, Oregon, United State. Today Nike has a total U.S retail stores of 339 and non-U.S retail stores of 592 (Nike …). Nike is a multinational company that operates in many countries around the world and is considered as one of the most successful brand. The keys to sustain a business could be implemented in many different aspects. For instance, in today’s world a corporate social responsibility (CSR) is said to become a new backbone of a sustainable business (CSR textbook). For Nike, the definition of CSR is that ‘’It is not just about getting better at what we do- addressing impacts throughout our supply chain-it’s about striving for the best, creating value for the business and innovating for a better world’’ (CSR textbook). As Nike has to supply its products all around the world, it has to keep up with an innovative product research, design, development and manufacturing , but at the same time keeping up all areas of its operation with a responsible business practices. To keep up with a rapid changing and competitive business environment, multinational company like Nike has to implement the sustainable business strategy that is also aligned to corporate social responsibility.
While sweatshop issues are not a new issue in this globalised economy to transnational firm’s cost reduction strategy, Nike’s success is what brought itself tremendous attention as the multinational firm everyone knows to be involved in sweatshop. Despite its bad publicity in the last decade concerning abused human rights in its outsourced factories, Nike has “executed one of the greatest image turnarounds in recent decades” (Business Insider, 2013). It has transferred itself from being known as “the global symbol of abusive labor practices” to being “the first among its industry to publish a complete list of the factories it contracts with”. It has proved itself through providing transparency in its operation, to be a pioneer within its industry to accept its pitfalls and continuously be committed in devoting itself in corporate social responsibility, notified by its publication of corporate social responsibility reports.
http://www.businessinsider.com/how-nike-solved-its-sweatshop-problem-2013-5?IR=T
Corresponding toward this backdrop, this dissertation will review relevant literatures on corporate social responsibility (CSR) and business sustainability in order to provide an integration of corporate social responsibility practice of Nike. The paper discusses the definition of CSR and business sustainability, and further examine on Nike’s CSR activities and whether or not its CSR has any correlation to its sustainable business.
1.3 Significant of the Study
The need to understand the importance of CSR in aligning to a business strategy would whether or not help a business to sustain in any aspects. The on-going debates of whether a corporation should heavily invest in CSR or it is not a corporation role to pursue in such activities. For many corporations, CSR may just be one of the mean for them to deal with media or what is called a Green-washing, since there is an increasing demand from customers and community for corporation to have a responsible business practice. However, for some corporations tend to understand the underlying necessity and fundamentals benefit of real CSR to business sustainability. The study of Nike will helps partially illustrate of how the adoption of CSR activities help in the achievement of a business sustainability.
1.4 Statement of Purpose
The important role of CSR in today’s business environment and to examine whether CSR has a correlation with a business sustainability of a firm, inclusively the Case study of Nike.
1.5 Statement of the Problem
Failure to encounter for corporate social responsibility activities represents threats toward the firm’s reputation. It represents a challenge, corporation must tackle and integrate into their strategy. To begin with a general suspects, it requires multinational corporation to actively response with media pressure on its operation pitfall , major disasters, and governmental regulations. This translates into strategic implication of the business operation. To sustain a business, a corporation does not only need to have outstanding products and good marketing strategies, but it also needs to comply its operation with an agenda so called Corporate Social Responsibility (CSR). There are many different school of thoughts of how CSR shall encountered for and defined. The concept of CSR itself is still debatable whether a company should invest in CSR activities. There are various cases that support the claim that a corporation shall pursue its CSR aligning to its business strategy as it may help a business to succeed. The study of this research paper seeks to examine Nike’s CSR activities and whether or not its CSR helps a company to have a sustainable business in any aspects.
1.6 Research Aim
The purpose of this study is to determine the correlation between corporate social responsibility and business sustainability and whether an adoption of CSR activities would help in an achievement of business sustainability.
1.7 Research objective:
– to explore business sustainability)
– to review the literature related to corporate social responsibility and established its relationship to business sustainability)
– to examine the relationship between corporate social responsibility and business sustainability of Nike
– to provide recommendation that companies can use in order to improve the corporate social responsibility
1.8 Research Questions
– What have Nike done to promote its corporate social responsibility?
– What are the factors that could contribute to Nike’s business sustainability?
– In what ways, does Nike’s corporate social responsibility contribute towards its business sustainability?
– Why should Nike keep investing to improve its corporate social responsibility? Which strategy shall be adopted to improve Nike’s corporate social responsibility?
1.9 Dissertation Structure
This section presents the summary of the following chapters of the research. The remaining dissertation is divided into chapters as the following.
Chapter 2: This chapter provides synergy of relevant literatures on corporate social responsibility and business sustainability concepts. It illustrates the rationale and contributing factors toward corporate social responsibility. It also revises on different models used to understand corporate social responsibility.
Chapter 3: This chapter provides an overview of research methodology. The different type of research philosophy, research approach, research methods, research design, research strategy, and data collection will be discussed. This chapter will also discussed about the research reliability, research validity, research ethics and the limitation of this research.
Chapter 4: This chapter provides data analysis and findings on the Nike’s CSR activities and whether this adoption of CSR activities help Nike to achieve its business sustainability in any aspects.
Chapter 5: This chapter provides the discussion of the overall findings and recommendations for Nike’s further adoption of CSR.
Chapter 2: Literature review
2.1 Introduction
Corporate Social Responsibility (CSR) also termed to as responsible business, sustainable, responsible business, or corporate citizenship encompasses a corporate self-regulation incorporated in a business model to ensure that the business runs as per the set regulations and strives to create a positive change in the society (Aguinis and Glavas, 2012). CSR is common in a society where the society and the business are interrelated. As such, the business has distinct roles to play in the society. Therefore, a corporate socially responsible business will engage in activities that aim at maximally on making profits for the shareholders and involves in charity partaking and social foundations. CSR came into light when several multinational enterprises (MNEs) were formed and brought the need for a force that would push the corporate governance mechanisms to incorporate transparency and fairness in companies’ corporate activities (Jo and Harjoto, 2012). Jo and Harjoto (2012) opine that Corporate Social Responsibility entails giving back to the society, creating a sustainable livelihood for the people in the society, and representing a philanthropic model in the community. Therefore, CSR is about the business encompassing the ethical, legal, and economic expectations that the society has towards the organization. Moreover, CSR is built under the concept of adhering to international norms, ethical standards, and supporting the law (Aguinis and Glavas, 2012; Hopkins, 2012). As a distinct theory that explains how the corporations interact with the society that it is established in, CSR has several obligations that it is expected to play. Aguinis et al. (2012) suggest that these obligations include philanthropic responsibility, ethical responsibility, economic responsibility, and legal responsibility.
2.2 Business Sustainability
Most multinational businesses have thrived for a long time due to the techniques applied by managers in the new competitive market. With high competition and changes in the economy, politics, social composition, technology, and other factors affecting businesses from within and outside the organization, business sustainability has remained a major challenge for most businesses today (Frias-Aceituno, Rodríguez-Ariza and Garcia-Sánchez 2012). Business sustainability entails the idea of achieving long-term goals without interfering with the current objectives (Bansal and DesJardine 2014). However, different corporations have various methods of ensuring business sustainability as well as the accomplishment of the aims of the stakeholders of a company. Bansal and DesJardine (2014) define business sustainability as the creation of a long-term value since the managers focuses on measures that would obtain current goals as well as the future and planned objectives. Similarly, the authors argue that sustainability does not compromise the ability of the business to achieve their objectives in the future (Bansal and DesJardine 2014). The current techniques and goals should not make the future generations fail to achieve their objectives; thus, ensuring business sustains the current business waves and the forecasted obstacles.
2.3 Business Strategy and Corporate Social Responsibility
According to McWilliams (2015), corporate Social Responsibility is a method that organizations employs in an effort of associating a community in development projects purposely for enhancing the interaction between the company and the neighboring community. Most projects enhance the objective of a company, which is precisely beyond profit maximization. A company that engages in Corporate Social Development has a unique way of winning the competitive market since most consumers would prefer a company that brings back to the community. McWilliams (2015) argues that the ancient objective of a company was to make profits as per the requirement of most stakeholders. However, recent studies (Gupta, Briscoe and Hambrick, 2016; Saeidi, et al., 2015; Trong Tuan, 2012) reveal the interaction of managers and the community as the government intervenes in an effort of increasing positive impact from a company in the community development.
Business sustainability and the corporal social responsibility have a relation since different authors and scholars have suggested several incidences that intertwine the two modules. D’Amato, Henderson, and Florence (2009) suggest that corporal social development involvement in a community would help the business attain a forecasted sustainability since the firm would have important objectives towards the obvious consumers around the community. Similarly, the government intervenes to ensure the company has a positive impact towards the community as well as meeting the primary objective of wealth creation to the stakeholders and increasing revenues towards the state (Linnenluecke and Griffiths, 2013).
2.4 How to Promote Corporate Social Responsibility
Business involvement in CSR is a social responsibility brought up by the ideas of many individuals with the power to decide what to do in a community. For instance, Gupta, Briscoe and Hambrick, (2016) argue that the size and reputation of a company determine the involvement towards a community. A big company would have the attention of many individuals including the government and the community in helping the community attaining environmental goals. Similarly, Gupta, et al. (2016) explain the possible reasons that promote the intervention of a company in a CSR system. They argue that the decisions of the top officials of the company have the final rule to deciding on whether to get involved with the CSR or not.
According to Wu et al., (2014), the involvement of a company in the development of CSR is a way of achieving many goals associated with the sustainability of the business. However, the best way to promote the company’s CSR is to define the role of the company in the community and the possible ethical measures that would see the development of the community in a positive way. Wu et al., (2014) describe the importance of ethical definition in relation to whether the involvement in CSR would ensure positive feedback towards the business as well as maintaining the sustainability development forecasted by the managers. Therefore, the study described the importance of identifying ethical leaders that helps in understanding the improvement of a company that leads to sustainable development (Wu et al., 2014).
An analysis conducted by Pless, Maak and Stahl, (2012) indicates the measures responsible for promoting the evaluation of an excellent CSR in a company. The authors argue that companies should train competent leaders who would understand the importance of implementing CSR in the business entity. However, Pless, Maak and Stahl (2012) recommend the idea of sending qualified managers to other developed countries in encouraging the learning of newly implemented ideas obtained from social responsibility from other competent companies. Similarly, the authors suggest the goals of every company suggesting the implementation of a criterion applied by Ulysses Company that aimed at promoting the implementation of CSR in their community as a way of protecting their goals of business sustainability. The study entails ideas suggesting that Ulysses Company aimed at sending their managerial trainees to other developed parts of the world to attain new tactics that would help the company achieve their goals and meet sustainable development. Similarly, the idea of obtaining lessons from foreign countries has helped the company in analyzing the effectiveness of CSR in bringing sustainable development in their country, thus, having positive impacts to the business entities.
Another study by Jones Christensen, Mackey and Whetten (2013) contemplates on the importance of leadership qualities in the implementation and promoting of CSR strategies at a given company. They suggest that a company has leaders and followers with a similar goal of sustaining their sustainability in the long-run. Thus, implementing a progressively achievable CSR would be the first step in winning the trust of the community. Additionally, Chabrak (2015) brings out the notion of promoting CSR with the implication of improving the integrity of the business. The idea of protecting the integrity works best when the company officials promote the workability of a company in an effort of retaining their goals of protecting the interests and nature of the business in the community (Chabrak, 2015). Therefore, the idea would promote CSR and at the end enjoy the fruits of business sustainability. .
Saeidi et al., (2015) explained the correlation between the implementation of CSR and the performance of a company. They emphasize on methods that lead to the promotion of CRS in a company that would see the development of the company. Customer satisfaction was the main objective in winning the competitiveness as discussed by the authors that has contributed to the financial performance with a better implementation of CSR. Therefore, Saeidi et al., (2015) suggest that a company aiming at promoting the implementation of CSR should focus on protecting the firm’s competitiveness ideology, protecting company’s reputation, and enhancing customers’ satisfaction. Additionally, Hopkins (2007) debated on the importance of implementing CSR as a way of enhancing the promotion of the goals of the company in enhancing business sustainability. Therefore, the topic analysis on the importance of promoting CSR and the performance of a company has an understanding that aims at protecting the company in a long-run.
2.5 Reasons for a Company for Improving CSR
The success of a company in the field of profit maximization and sustainability depends on the strategies employed to see the development of the company. However, managers and stakeholders opt to incorporate the implementation of CSR with the aim of improving their financial performance. Flammer (2015) argues that -moststudies in the early 20th century have discussed the incorporation of CSR and financial performance as a failure. The Flammer (2012) opposes the idea since recent articles articulate an improvement in company’s financial performance in association with CSR. Therefore, as discussed by Flammer (2015), a company should implement CSR with the aim of improving their financial performance. Similarly, Jiraporn et al. (2014) add a credibility Flammer’s study by suggestingthat incorporating CSR in a firm’s business strategy helps increaseits credibility. However, better CSR strategies must be employed to see an improvement in CSR policies. Jiraporn et al. (2014) suppose the importance of improving the employment of CSR in the system of a company to increase credit ratings as well as offering a concrete platform for investors. According to Jiraporn et al. (2014), the use of CSR is a way of secret advertising that helps consumers learns about the company and their products.
The purpose of a CSR strategy in a company is to ensure all the stakeholders are taken care of regardless of the primary purpose of financial prosperity. However, Servaes and Tamayo (2013) argue that every company has an aim of pleasing the stakeholders as well as maintaining a well-established financial development. A company with a well-organized CSR system would create awareness in response to the competitive environment, thus, allowing valuable stakeholders such as customers to have a clear awareness of the policies employed by the company through the employment of CSR. Additionally, CSR helps in branding a company as valuable towards the perspective of the community. Cheng, Ioannou, and Serafeim (2013) add that the implementation of a CSR strategy would increase chances of accessing financial support from lenders, investors, and other financial institutions. However, Garay and Font, (2012) discussed the importance of CSR in small enterprises that purposely covers small-scale businesses. Garay and Font(2012) suggest that the incorporation of CSR in small businesses would result in the development of the businesses that would ensure growth and profit maximization in the long-run. Therefore, the studies reveal the reasons behind the need for improving the incorporation of CSR in every business that would see the growth of a company.
Additionally, a company that aims at winning a competitive environment would utilize any available resource for the business to thrive. Therefore, the company would use the available strategy of implementing CSR as a way of creating awareness as well as competing with the similar businesses. Boulouta and Pitelis (2013) provide a platform that discusses the importance of CSR in a competitive environment. The primary focus of a business is to meet the demands of shareholders, but that could not help in the fight against competition. Therefore, Boulouta and Pitelis (2013) bring the argument of a business trying to comprehend meeting the expectations of the possible stakeholders mainly consumers. According to Boulouta and Pitelis (2013), a company that accomplishes the desires of stakeholders has a better place in competition compared to other businesses that focus of profit maximization. Similarly, Lund-Thomsen and Lindgreen (2013) append the importance of CSR in expanding the global value chains that help in the development of a business network. For instance, a company has the mandate to implement CSR in creating awareness to the public on what activities entails their types of products or services. Furthermore, a company has to take responsibilities of other people they do business with and, provide adequate care to the workers and the society. Therefore, as Hahn (2012) claims, CSR helps in accomplishing the urge for a company to draw a clear picture of their business thus, the need for improving the implementation of CSR.
2.6 Factors that Contribute to Business Sustainability
Business is said to be successful when the managers can sustain from the challenges facing the development. However, some factors affect the growth of business both positively and negatively against their goal of financial health. Gimenez and Tachizawa, (2012) conducted a literature review of the possible outcomes that ascertains the implementation of unique strategies to see the development of business. Gimenez and Tachizawa, (2012) argue that business sustainability derives motives from supply chain whereby, the managers aims at creating a solid relationship with suppliers and other business associates. The idea would ensure winning of the clients’ trust in the business, thus, minimizing the chances of competition, which might kill the dream of sustainability.
Additionally, a business has the mandate to take responsibility of a community in return take the sustainable development of the society in the form of profit maximization (Baumgartner, 2013). However, Baumgartner (2013) argues that any business could attain business sustainability, but not all enterprises could achieve corporal sustainability, which endeavors between a link of CSR and being sustainable. Sustainability is driven by the presence of CSR platform that levels-up the availability of unique strategies that helps the achievement of company’s goals and sustainability (Cohen et al., 2012). Similarly, the tool for measuring an achievement of sustainability differs from people’s perspective. For instance, several enterprises have been using GDP as a tool for measuring the development of sustainability, thus, proving that the tool used in identifying the progress of business sustainability would react to any possible outcome (Pintér et al., 2012).
Moreover, technology development has recorded a significant contribution to the fact that sustainability and performance have taken the new waves in the business world. Carayannis, Sindakis and Walter (2014) argue that business sustainability is an outcome of business venture where managers and shareholders invest in technology as a way of sustaining from the current challenges. Similarly, Loorbach and Wijsman (2013) brings the idea of helping a business achieving sustainability from the lowest level but employing concepts that would see the expansion of a small business into a big corporate. Therefore, Loorbach and Wijsman (2013) used several examples that would help a small enterprise achieve the desired level of sustainability to the extent of growing into a bigger company, thus, ensuring a factorized concept in sustainability. For instance, the authors suggest the use of organizational transitional approach rather than optimizing the existence of a company. Similarly, transitional approaches entail the use of an illustrated approach called “Roof Transition” that describes the importance of experimental and research approach that would help managers attain their desired sustainable development (Loorbach and Wijsman 2013).
The sustainable business focuses on social impacts towards the realization of their goals irrespective of the duration of their success. Slawinski and Bansal, (2015) argue that a business would focus on either long-term or short-term goals that would help to achieve their sustainable level. Slawinski and Bansal’s (2015) study helps in illustrating what oil companies take in handling the emission of Greenhouse gas that affects the community. The effect might lead to losing of consumers in response to affecting the environment; thus, a company should ensure protecting their image by respecting the nature as well as focusing in profit maximization.
Another study by Hahn et al. (2014) articulates the possible factors influencing corporal sustainability. The authors argue that a business manager would focus on social, environmental, and economic goals that would see the development of financial prosperity. However, the move should take in the idea of incorporating CSR into the business strategy hence, increasing the consumers’ trust, and financial obligation (Hahn et al., 2014). Besides, Law (2010) takes the reader through a process of understanding what entails a company in the process of delivering sustainability in the industry. Law (2010) illustrates using a high-tech company where sustainability is the major purpose considering the competitive world.
Similarly, Zink (2014) stresses the idea of human factors that contributes to company’s sustainability in an effort of focusing on their objectives. Zink (2014) names human factors as ergonomics that defines social sustainability. Therefore, the factor that conceptualizes sustainability must be followed by a show of willingness and resource allocation that would help the company attain the achievements of having a sustainable development, thus, answering what should be done to achieve a company’s objectives.
2.7 CSR Contributing to Sustainability
Sustainability has developed due to the availability of CSR platform where companies have analyzed the importance of incorporating the wills of the community and the government (Moon, 2007). The link between CSR and profit prosperity is becoming thinner day by day when managers and shareholders consider giving back to the community as a way of winning competition and advertisement. Lozano, Carpenter and Huisingh, (2015) argue that sustainable development has been fueled by the availability of CSR strategies and other development theories when the company focuses on long-term goals instead of short-term profit maximization. Similarly, Reverte (2011) stresses the idea of employing CSR in the development of a sustainable company. The author illustrates with U.S companies that have reported prosperity after enrolling to government environmental services; that is, helping the government in climate restoration. Another study by Aguinis and Glavas (2012) concentrated on the link between CSR and sustainability consists of literature reviews from different authors who tried to analyze CSR and other concepts. Aguinis and Glavas (2012) discussed the relationship between CSR and sustainability since most authors contemplated that the implementation of CSR system in a company leads to various results that include profit maximization, competitive advantage, the value of stakeholders, and marketing strength, among other benefits. Therefore, the review of (Aguinis and Glavas, 2012) discusses all the possible positive results brought by the use of CSR.
Recent studies have discussed the contribution of large entities into the degradation of climate (Wang and Sarkis, 2013). However, the need to clear the doubt, most companies involve in contributing towards the concepts of helping the world achieve a clean world. Therefore, Lozano (2013) discusses the correlation between CSR and the sustainable development where companies focus on helping the government and other NGOs in cleaning the world. In the process, managers find themselves in a cocoon where they have to help the environmental changes and lead to the accomplishment of a corporal sustainability (Hąbek and Wolniak, 2015). The similar analysis includes the study of Lozano (2012) that entails an analysis of company’s system that develops from implementing CSR system. For instance, the tourism sector has declared that they have the mandate to protect the environment since their business works best in places with cool and reliable climate, thus, the need to protect nature should be their priority that would see the industry make millions of profits (Coles, Fenclova and Dinan, 2013).
Flammer (2013) discussed a number of companies that implement CSR and those that fail. The results showed that business entities reported different results since many companies that contributed to environmental awareness increased their sales compared to others that neglected the CSR implementation, thus, making a decreased curve of profit maximization. Additionally, Rexhepi, Kurtishi and Bexheti, (2013) articulates the importance of CSR in realizing innovation as one of the best drivers of sustainability. Linnenluecke and Griffiths (2013) adds credibility to the discussion of sustainability as linked to CSR. The authors suggest that CSR is the primary contributor to sustainable development success when incorporated towards the social and environmental issues. Furthermore, Schaltegger, Freund and Hansen (2012) shos the importance of CSR in the development of company success, thus, proving the point of CSR as the instigator of development sustainability. Heikkurinen and Bonnedahl(2013) also argue that environment degradation is political. Thus, every large business entity should take part in restoring the climate, and that would help the business attain a successful sustainable development. Strand, Freeman and Hockerts (2014) also noted that CSR leads to the achievement of sustainability and they give an example of Scandinavia: a country that is well known for their sustainable development and a good implementation of CSR.
2.8 Models of Corporate Social Responsibility
2.8.1 Carroll’s CSR Pyramid
This framework argues on the reasons why organizations should meet the social responsibilities that they are expected to accomplish. According to Nalband and Kelabi (2014), this CSR concept is built on the basis that profitability is the priority of any business. Although the business exercises the CSR obligations, it should maximize the profits while being ethically responsible (Nalband and Kelabi 2014). The business should also comply with the regulations and laws of the society. Another feature of this framework is that the business should meet the ethical duties before considering the philanthropic options (Nalband and Kelabi 2014).
The four responsibilities of a business that are emphasized by Carroll’s CSR pyramid include; philanthropic, legal, economic and ethic. Under the economic perspective, Nalband and Kelabi (2014) highlight that the business is expected to be responsible while at the same time maximize profits. This is the only way for a business to thrive in the society for a long term while benefiting the community. Yelkikalan and Köse (2012) argue that being ethical means that the business should not only adhere to the laws, but also go beyond the laws in treating the society ethically. As such, the business is required to act both ethically and morally. Good ethical responsibility is reflected by how the business treats its employees and suppliers since these are the basic parties that the business interacts with (Yelkikalan and Köse, 2012). The framework emphasizes that the business should show responsibility in adhering to the rules and regulations of the society. Such rules and regulations should be adhered to when treating the employees and in ensuring the health and safety within the work place. Philanthropic reflects on the responsibility of the business in giving back to the society (Dusuki and Yusof, 2016). However, this responsibility is discretional but vital for creating a good rapport in the society.
The model emphasizes on the importance of profit in addition to the philanthropic responsibility. Moreover, according to Nalband and Kelabi (2014), it is easy to understand based on the few yet clear responsibilities developed from the model understanding. Nonetheless, this model gives simple messages; thus, it is not complicated. However, it may appear too simple for some people. Besides, some of the business are not always doing what they claim to emulate from this model. Additionally, based on Dusuki and Yusof (2016), ethics should be considered to be placed at the top of the model rather than the philanthropic responsibility.
2.8.2 Triple bottom line
Henriques and Richardson (2013), while arguing on whether the triple bottom line works or not, note that, the concept was established based on the argument that a business should prepare three separate bottom lines. The triple bottom line model developed by Elkington aims at advancing the objective of sustainability in a business. Such sustainability objectives are extended beyond the profitability aims to achieve the environmental and social objectives of the business. The elements that make up the triple line model are referred to as “profits, peoplem and planet” (Henriques and Richardson 2013).
The first bottom line is a measure of how the corporate has been socially responsible throughout its activities. According to Savitz (2012), the social bottom line is used in measuring the profits of the business in regards to the human capital and the business position in the society. Triple bottom line model emphasizes that the social bottom line can be increased of only the business has beneficial labor practices and is involved in the community development practices (Savitz, 2012). Moreover, a business that does not create a good rapport with the society that it is established in, both the employee and client base minimize. This model measures the sustainability of the business in regards to the human capital where the business is expected to create a desirable working environment to ensure maximum productivity of the employees (Savitz, 2012). Through this model, the business can measure its social impact hence serve as guideline for the progress of the business.
The second bottom line measures how the business has been environmentally responsible since its establishment. The environmental sustainability addressed by this model takes the view that the less influence the business has in the environment, the less the business can consume the natural resources (Willard, 2012). Through this, the business can stay for longer and be more successful. By controlling the environmental bottom line, the business should manage and report on the consumption of resources. As such, the waste and emissions should be reported. One of the benefits of sustainable business model as stated by Willard (2012) is that it reduces on waste and adheres on green policies. One of the disadvantages of this model is that based on the business size, the process can be difficult and time consuming.
An account of the profit and loss made is another bottom line addressed by this framework. Savitz (2012) has argued that this scenario is referred to as the economic sustainability, which gives a measure of how the business affects the economic environment. Strengthening the economy is one of the requirements of a business to thrive in future. Savitz (2012) asserts that by the utilization of this model, the business can expand based on the changes in economy since it helps the business understand the position in the economy based on the relationship of the business and the society and the contribution of the business to the economy. Typically, the triple bottom line concept aims at measuring the environmental, social, and financial performance of the corporation (Henriques, and Richardson, 2013).
2.8.3 Ackerman’s model
According to Garriga and Melé (2013), the Ackerman’s model explains that responsiveness should be the main goal of any social activity of business. Based on the model, responding to the social issues should undergo a systematic process, which begins with problem recognition. The managers of the business have to first understand the social problem faced and express a will to resolve the social problem. After that, it should be followed by a study of the issue and coming up with diverse ways of dealing with the issue and finally implement the decision. This is ensured through hiring of experts who give suggestions on how to run the operations. To maintain management discretion, the business managers should respond to the identified social issues early (Sharma and Kiran, 2013). There are six strategies, which are used in the adoption of the CSR. They include adversary strategy, rejection strategy, compliance strategy, proactive strategy and accommodation strategy. Garriga and Melé (2013) emphasize on the internal policy goals of an organization and the relationship of these policy goals to the CSR.
2.9 Summary
The literature review has widely exposed the relationship between the implementation of Corporate Social Responsibility and sustainable development study. Different authors have analyzed the topic discussing the importance of incorporating CSR for the benefit of improving the environmental and social development as well as attaining a reasonable sustainability. Sustainable development is attained by mixing specific strategies connected to CSR that helps the consumers believe in the company, thus, creating a platform for business competitive superiority. Various companies like Nike Incorporation have created a platform in the business world whereby they have established a platform that implements CSR, helping them achieve financial goals, as well as sustainability. Therefore, the literature review summarizes ideologies of ` different authors on the topic of correlating CSR that leads to business sustainability
Chapter 3: Research Methodology
3.1 Introduction
3.2 Research Philosophy
There are many different definitions for the term Philosophy. However, the emphasis that each definition is given leads to different significance. Philosophy is the critical analysis of the fundamental assumptions or beliefs held by an individual. (Saunders and Lewis 2012). Research philosophy is related to the development of knowledge and the nature of that knowledge in relation to research. We may not know it, but different research philosophy contains different assumptions on how we view the world. The research philosophy we used in each research will also influence our research design and methods of that research. These assumptions will highlight the research strategy and the data collection methods we choose as part of the strategy. Different people have a different view on what they see in the world (Easterby-Smith, Thorpe, and Jackson 2008). There are four main strands of the research philosophy, which are Positivism, Realism, Interpretivism and Pragmatism (Saunders and Lewis 2012)..
Positivism is a research philosophy similar to those used in the physical and natural sciences. It is a highly structured methods that employed to facilitate duplication, that resulting in a law-like generations (Saunders and Lewis 2012). Positivist researcher’s main concern is to study observable and measurable variables in certain controllable conditions and to describe the reaction of these variables o treatment applied by the researcher. The emphasis is to predict the outcomes of the research so that these variables may be controlled in the future. The positivist research philosophy believed in the cause and effect matter. As a result, when their suggested theory is not defined by the findings, a positivist researcher will revise the theory for a better predict reality (Saunders and Lewis 2012). The positivist researcher may carry a research with many cycle of attempts until their prediction result is accomplished (Creswell 2008).
Interpretivism, is also known as interpretivist which involves researchers to interpret elements of the study. This research philosophy is significant for a research to be comprehend and differentiate by human’s involvement and their responsibility as social actors (Saunders et al. 2009). Interpretivism integrates human interest into a study. Interpretive researchers assume that the access to reality (given or socially constructed) is only through social constructions such as language, consciousness, shared meanings, and instruments”.
Pragmatism is a research philosophy that only take the concepts to be relevant if only they support the action. Pragmatics recognizes the different ways to interpret the world and conduct the research, as there is no single point of view could give the entire picture or meaning of the situation. They believe that there may be multiple realities to commence.
Realism is a research philosophy which emphases that the objects exist independently of our knowledge of their existence. Like positivism, realism relates to scientific inquiry (Saunders and Lewis 2012). The center of realism is that our sense shows us as a reality of the truth as the objects have an existence independent of our mind. Realism embraces that there is a reality independent of the mind. However, the opposite of realism is the idealism. Idealism is the theory that only the mind and its contents do exist. To exemplify the clear definition of realism is to contrast its two different types, the direct realism and critical realism. Direct realism states that what you see is what you get, what we experience through our senses is a precise representation of the world. Whereas, the critical realism, advocates the correlation of the cause and effect of the situation. Critical realists argue that what we experience are just the sensations, the images of the things in the real world, but may not be the direct things.
This research will be using a critical realism philosophy since it examines the correlation, cause and effect of Nike’s company CSR activities and its business sustainability. It tends to seek for the relationship of corporate social responsibilities and the sustainability of the business.
3.3 Research Approach
There are three main type of research approach, inductive, deductive and abductive research approach.
Inductive approach is also known as inductive reasoning. The observations and theories are proposed towards the end of the research process as a result of the observations. Inductive research includes the search for pattern from observation and the development of explanations, or theories for those patterns through the series of hypotheses (Saunders & Lewis 2012). In inductive studies, there are no theories or hypothesis that are applied at the beginning of the research and researcher is free to change the direction or terms of their study after the commenced of the research process.
Deduction approach is a research approach that involves with the testing of a theoretical proposition by using a research strategy designed to perform the test (Saunders & Lewis 2012). The key characteristics of deductive approach is initially to explain the causal relationship between variables (Saunders & Lewis 2012).
Abductive approach is the research process that starts with a surprising facts or puzzles. The research process is devoted with their own explanation that may encounters with an empirical phenomenon that cannot be explained by the existing range of theories.
In this research, an inductive approach will be used. Through the examining of the case study, journal articles, and the company reports on CSR activities and the company performance may give us an insight understanding whether or not CSR has an effect on the company’s sustainability.
3.4 Research Methods
There are two main type of research methods, qualitative and quantitative research methods that could be used in the research. Qualitative research methods give an interpretation and aim to provide a depth of understanding. Qualitative methods are based on words, perceptions or feelings rather than numbers. It includes the experiments, interviews, focus groups, and questionnaires with open-ended questions (Monette et al, 2005, p.428). Whereas, Quantitative research methods is described and measured with the level of occurrences on the numbers and calculations basis. This research method answers the question “how many?” and “how often?” rather than ‘’why’’. Quantitative research is defined as an involving collection of numerical data and exhibiting the view of relationship between theory and research as deductive, with a predilection for a natural science approach. This research approach has an objectivist conception of social reality (Bryman and Bell 2005, p. 154)
This research will be using a Mix Methods, where both qualitative research and quantitative research are used to explore the research objectives. Case study, journal article, company report and its financial report will be look and analyse through both quantitative and qualitative methods.
3.5 Research Design
There are 3 main type of research design, exploratory, descriptive and explanatory research. Exploratory research is about finding general information about a topic that is not yet understood clearly by the researcher. It is a study that provides uncertain answers to the initial questions, that may need to be followed up with more detailed research to provide more reliable answers. This kind of research is usually conducted by searching the academic literature, interviewing the experts in that subject, and conducting interviews (Saunders & Lewis 2012). Whereas, Descriptive research is a research that describe accurate persons, events, or situations. It usually asks such questions as what is within the quantitative subject. It involves the collection of measurable, quantifiable data. This kind of research is usually conducted by using questionnaire surveys, sampling, interviews, and reanalysis of secondary data (Saunders & Lewis 2012). Explanatory research is a research that focuses on examining a situation or a problem to explain the relationship between variables. This kind of research is a stage further of the descriptive research since it looks for an explanation behind the existence of the variables’ relationship. This kind of research is conducted by using case studies, observation, historical analysis, attitude surveys, and statistical survey. This research can be quantitative or qualitative (Saunders & Lewis 2012).
3.6 Research Strategy
There are different types of research strategies that can be used for exploratory, descriptive and explanatory research. As, certain research approaches and strategies are more suitable to particular stage or type of research than another, it is very important for a researcher to understand the different type of research strategies (Saunders & Lewis 2012). The different types of research strategy are experiment, survey, case study, action research, grounded theory, ethnography, and archival research. In addition, it is also possible for a researcher to combine research approaches and strategies within the same study (Saunders & Lewis 2012).
Experiment is a type of research strategy that involves the theoretical hypothesis, and section of sampling. The purpose of this is to examine the causal relationship between variables, to establish whether a change in one independent variable could produces a change in another dependent variable (Saunders & Lewis 2012). Survey is a research strategy that involves the structured collection of data from a substantial population. Its data collection may be taken in the form of questionnaires, structured observation and structured interviews (Saunders & Lewis 2012). Case study is a research strategy that investigate a particular contemporary topic within its real-life context by using multiple sources of evidence (Saunders & Lewis 2012). Action research is a research strategy that concerned with the management of a change and involving close cooperation between practitioners and researchers (Saunders & Lewis 2012). Grounded theory is a research strategy that the theory is developed from a data generated. A series of observations or interviews are involved in an inductive approach (Saunders & Lewis 2012). Ethnography is a research strategy that emphases on describing and interpreting the social world through direct field study. Its main concern is to learn from people rather than to study them (Saunders & Lewis 2012). Archival research is a research strategy that analyse the administrative records and documents as the major source of data (Saunders & Lewis 2012).
In this research paper, Case study and Archival research strategy will be used. The review of Case study of Nike’s CSR, Nike’s financial reports and Nike’s CSR reports will be used to investigate the particular relationship of CSR and business sustainability.
Review of secondary data, review of Case study
3.7 Data Collection
There are two main source of data, primary and secondary data. The data are used by researchers to answer the research questions and attain the set research objectives. Primary data refers to the data that has not yet been processed and is still in its raw or original state (Saunders & Lewis 2012). This type of data is gathered through interviews, observations, field surveys or the administration of questionnaires. On the other hand, Secondary data is one that is gathered from the previous research works and has been processed or refined (Saunders & Lewis 2012). Secondary data is usually collected more quickly comparing to primary data. This kind of data is collected from sources such as books, journal articles, articles or derived from an online internet sources.
This research will only be using the secondary data only as Primary data required more time and resource. The data collected or gathered in this research will be generated from a broad range of internet based sources such as journal article and the official website. This method of data collection is preferred because it provided an easy access to a rich pool of previous research works. Journal articles and case studies on the corporate social responsibility activities of Nike, and Nike’s official website and financial report will be used to examine and analyse the relation and effect of CSR on its company sustainability.
3.8 Research Reliability
3.9 Research Validity
- how could this research face the content validity
- How can I tackle the problem
The validity and reliability of the research is based on the secondary data that distinguished by the researcher. In order to make sure this research is valid and reliable, a consultation with supervisor, tutors and personal research will be needed to get deeper insight into creating a relevance reasoning and conclusion. In addition, the data that will be used in this research should come from a reliable and confidential data source such as academic and official website with proper referencing.
3.10 Research Ethics
There is no ethical issue since the information used in the research is subjective to the company publication and other media source. It is not subjective any specific individual thus no issue of confidentiality arise. Regarding the code of practice for ethical standards involving human participants (Saunders & Lewis 2012), this research does not require any participants as the main data sources are secondary data. However,
I will guarantee that there is no harm in anyway on collecting this research data and I will be honest with the results.
3.11 Limitations of the Research
The study is based on secondary data which to an extend is limited in term of its reliability as some information published is written within the interest of certain party. The annual report to be used in the study also results in a degree of limitation since the non-financial information obtained from the report is written by the internal party and thus is bias toward the interest of the firm. The financial information obtained is audited, thus the reliability of the information is enhanced as there is a reduction of any materiality that could arise. The other limitation is the time constraint as this research will only be done within 7 months, it may not be possible to collect every relevance data that is published.
Chapter 4: Data Analysis and Findings
Introduction
The Nike Corporation had a tumultuous period in the 1990s due to the numerous accusations targeting the company’s business model, abuse of employees, low payment and lack of corporate social responsibility activities (Riddle, 2013). Nike took up corporate social responsibility engagements targeting innovation based on four pillars of materials to use, enhanced processing, better choices and the bringing of choices to scale (Nike, Incl., 2011).
The vision and mission statements of Nike contain a reflection of the company’s commitment to CSR to help enhance its business sustainability. The Nike, Inc. FY10/11 Sustainable Business Performance Summary notes that Nike’s vision statement states that, “Our vision is to build a sustainable business and create value for Nike and our stakeholders by decoupling profitable growth from constrained resources”.
Through the company’s vision statement, it is important recognize its commitment to CSR as it aspires for a sustainable business and enhanced welfare for its stakeholders. According to Riddle (2013), Nike’s commitment to CSR in the modern competitive market is evident in its vision and mission statements and the desire to achieve balance between people, profits and planet. Nike faced criticisms of its treatment to the environment especially in China where it was accused of environmental pollution through the release of poisonous effluents to rivers and other forms of pollution resulting from the overall manufacturing process.
The publicity created by Nike for its commitment to CSR in its vision statement is a convincing indication of the its intent to realize a better working environment for all associated stakeholders including the planet itself. Riddle (2013) notes that Nike adopted a policy to recycle its products in an effort to help reduce the level of environment pollution caused by its products around the world. The commitment to this process was never existent in the 1990s when it was accused of concern for only its profits and not the environment or its employees.
Through Nike’s vision, it is evident that the company embraces innovation as a tool for corporate social responsibility to help enhance its sustainability in the complex business market. Riddle (2013) notes that the corporation innovates to bring about enterprise-level sustainability and to make innovation the centre of its business model. The continued increase in the level of innovation at Nike is an indicator of the company’s resolve to enhance its business sustainability by bringing on board new sustainable products. Jackson and Sawayda (2014) argue that Nike has greatly evolved in its commitment to CSR since the company’s criticisms in the 1990s. According to the scholars, the company has embraced various CSR activities such as environmental sustainability.
Environmental Sustainability
Nike’s commitment to CSR through environmental sustainability is demonstrated in its efforts to enhance product recycling as a way of reducing environmental pollution through worn out products. Jackson and Sawayda (2014) observe that in the year 1995 the company’s Reuse-A-Shoe program began collecting shoes across its retail stores to help enhance its efforts to boost environmental sustainability through recycling. The initiative started-off as a CSR technique to show the company’s concern for the environmental dangers its products posed the inhabitants of planet earth. The program gained pace as the world grew more concerned of the CSR activities the companies whose products they consumed engaged in. To help enhance the effectiveness of the Reuse-A-Shoe program in the United States, the company partnered with the National Recycling Coalition in the year 2002 and was able to effectively collected and recycle millions of worn-out Nike footwear (Jackson & Sawayda, 2014).
The Reuse-A-Shoe program gained fame and helped the company exhibit its commitment to CSR by contributing greatly to a safer operational environment in the United States and beyond. Due to the success of the Reuse-A-Shoe program, the Nike management opted to expand the scope of product collection for recycling to other regions around the world and that led to the creation of shoe collection points in Europe and Australia (Jackson & Sawayda, 2014). By the year 2014, the company had successfully collected more than twenty-eight million pairs of worn-out athletic shoes since the year 1990 (Jackson & Sawayda, 2014). The collection of such a large number of sport-shoes for recycling is an indication of the company’s commitment to the realization of a more sustainable operational environment and a better planet earth for future generations.
The creation of a closed business loop at Nike is another element of great concern for environmental sustainability. The Considered Design philosophy is the one used by Nike to help create a closed business loop through which the company monitors its level of wastes at all manufacturing stages (Jackson & Sawayda, 2014). The researchers describe a closed loop business philosophy as one that allows for recycling of all wastes at all production stages in a company. The adoption of a closed loop business philosophy ingrained in the Nike business administration model helps the company enhance its ability to live to its vision and mission statements targeting maximization of CSR.
Jackson and Sawayda (2014) further note that the use of the Considered Design philosophy is not only a common rhetoric at the company but a big reality illustrated by the company’s ability to enlist it in its company ethos. The company uses the most sustainable technology to help ensure production of best products for best athletes. The establishment of guidelines that ought to be met across all the company’s production lines across the world further enhances the realization of Considered Design at the company. Jackson and Sawayda (2014) observe that the company has set the 2020 target as the year to realize total adherence to its set Considered Design guidelines that will help minimize wastes and thus preserve and conserve the environment.
Factory Transparency
Nike considers operational and management transparency as an integral function of its efforts to realize business sustainability across its different factories around the world. The company faced accusations of low remuneration for its staffs in the 1990s despite the huge profits and market dominance it enjoyed at the time, prompting the need to adopt better employee welfare management programs such as the provision of sustainable wages. Jackson and Sawayda (2014) argue that through the establishment of the Management Audit Verification (MAV), the company is able to ensure adherence to its code of leadership. The tool ensures harmonization of wages, development and observation of work hours, concern over employee grievances in addition to the stipulation of the guidelines for freedom of association to help enhance the overall employee welfare.
Nike’s commitment to transparently enhancing the overall welfare of all employees’ helps the company stay put to its resolve to ensure business sustainability via CSR. The company cares for the environment as from a CSR perspective is further boosted by the adoption of the Environment, Health and Safety (EHS) audit tool that helps the company adhere to its Considered Design framework. Nike’s adoption of the Safety, Health, Attitude of Management, People and Environment (SHAPE) tool and its subsequent replacement in the year 2007 is a clear revelation of its commitment to environmental and employee welfare sustainability efforts (Jackson & Sawayda, 2014). The company replaced the shape audit tool with a factory self-evaluation tool to help ensure increased adherence to its code of leadership.
The Nike International Corporation brags high accountability and transparency standards due to its ability to disclose its supply chain in addition to monitoring various aspects of its suppliers to help ensure adherence to its code of leadership. The modern operational dynamics at Nike have their anchor on CSR as a model for business sustainability. The company’s ability to take note of the overall adherence to its code of conduct by all its suppliers comes to the fore with the use of a Balanced Scorecard technique. Jackson and Sawayda (2014) opine that the use of the Balanced Scorecard is real at Nike as the company takes consideration of environmental care for all its suppliers and factories around the world. Additionally the technique helps the corporation monitor labor and health issues across all its factories in a bid to help ensure maximum welfare for all its employees around the world.
Nike has a reputation of a leading CSR observe around the world due to the transformation the company underwent after the criticisms of employee and environmental abuse it suffered in the 1990s. The company’s commitment to environmental sustainability as a corporate social responsibility initiative is outlined it its adoption of the Reuse-A-Shoe initiative that has helped it collect and recycle more than twenty-eight million shoes since 1990 (Jackson & Sawayda, 2014). The commitment to environmental sustainability is further exhibited by the company’s resolve to use a Balanced Scorecard as a method of evaluating the labor, healthcare and environmental sustainability efforts put in all its factories to help enhance it business model.
Jackson and Sawayda (2014) note that Nike is highly concerned about its labor and environmental sustainability efforts in its business model as it considers CSR the heart of business success and sustainability in the modern world. This commitment is evidenced by the company’s establishment of a CSR committee to help deliberate on issues regarding the welfare of the employees, customers and environment. The empowerment of the CSR committee at Nike, giving it the powers to analyze policies and draw recommendations to the corporation’s board of management is an indicator of the level of commitment to CSR at Nike. The creation and empowerment of the CSR committee at Nike portrays the relentless efforts and resolve the company has in its efforts to ensure a sustainable CSR oriented organizational and operational environment.
Jackson and Sawayda (2014) observe that the Nike’s CSR vice president directly reports to the company’s CEO while the corporate social responsibility committee comprises at least two board members. This implies that the CSR committee and its work form an integral base for the organization’s operation and activities, hence, critical to the success of the company. Additionally, the management at Nike is noted to be making efforts to ensure the organization’s CSR initiatives are adhered to at all levels (Jackson & Sawayda, 2014).
Sustainability Report: FY 2011
Nike stays highly committed to the realization of sustainable economic growth innovation. Valjakka (2013) notes that the Financial Year 2011 sustainability report of the Nike Corporation indicates great commitment to the realization economic growth through innovation and adherence to set CSR guidelines. Nike’s CSR strategy as noted in the Financial Year 2011 sustainability report categorizes the company’s CSR initiatives into various stakeholder variables that help reiterate the company’s commitment to sustainable growth. The breakdown of the steps undertaken by the company as per the 2011 sustainability report provides sufficient evidence of sustainable strategies the company is employing to help realize its CSR targets. The following breakdown of the sustainability reports brings to the fore the strategies employed by the company to help achieve all the CSR targets:
Customers
In the 2011 financial sustainability report, Valjakka (2013) observes that Nike aspires to be more ethical in its dealing with its customers as a CSR strategy to help enhance its brand and public image. The report indicates that Nike begins and ends with the consumer in addition to aspiring to meet the continued increase in sustainability demands of the client. The company notes that the consumer expectations have been growing with time and there is urgent need to both meet the increasing demand as well as the sustainability of the continued demand increase to help enhance the company’s economic growth. To help achieve this goal, the sustainability report notes that the company was to use an online platform dubbed “Nike Better World” to help exhibit innovative solutions to the increase in customer demand and enhance the sustainability of the increase (Valjakka, 2013). The online innovative platform was expected to respond to environmental issues and social issues affecting customers, hence, an ethical consideration to customer welfare.
The company realized that consumers were more responsive to the quality of products in the market and as a result, opted to produce excellent products suiting customer tastes and demands. The company’s initiative to create products designed to meet customer expectations and increased demand is in line with its resolve to be more ethical in its customer dealings in addition to boosting its economic position. The realization of increased economic performance in this case was not a primary goal but rather a secondary product of the CSR initiative of enhancing ethical behavior in dealing with customer demands and expectations.
To help realize the ethical CSR initiative through this process, Valjakka (2013) notes that the 2011 sustainability report proposes the need for the company to ensure increased transparency. Higher levels of transparency at the organization were considered integral to the realization of better care and concern for customer welfare. The creation of strategies to address the needs of customers in line with the company’s customer welfare CSR initiative was important in helping it realizing sustainability through the innovative CSR programs. The company understood the need to improve customer welfare as an ethical consideration to help change the public perception held about the company in the 1990s. Nike appreciates the efforts of all stakeholders and considers it ethically important to meet the exact customer demands in addition to ensuring high product quality despite the limited resources.
Shareholders
Nike aspires to attain sustainable growth through the reduction of the production costs with the maximization of innovation margins. Valjakka (2013) observes that the organization aspires to decouple profitable growth from constrained resources to help bring about economic growth that can help boost the economic soundness of the corporation and the shareholders themselves. The increase in the level of innovations at Nike is important in helping ensure reduced production and operational costs while enhancing the amounts of profits. The motive to increase the welfare of shareholders is economic and the company labors to achieve this CSR motive through the struggle to maintain sustainable economic growth. The determination to achieve sustainable economic growth for the sake of shareholders is a great show of the company’s concern for the welfare and economic growth of its shareholders. The commitment by the company to provide better shareholder benefits through reduction of production costs and enhancement of innovation margins is achievable if the company grows sustainably as envisaged.
Employees
As per the Financial Year 2011 sustainability report, the company outlines its commitment to the realization of improved overall employee welfare as an ethical move in line with its CSR objectives and goals. Valjakka (2013) notes that the 2011 Nike sustainability report identifies the areas that the company has enhanced focus to help realize increased concern and care for customer welfare. The main areas that the Nike Corporation is noted to have put so much focus with regard to employee welfare include; workers safety and welfare, regulation of overtime services, enhancement of workers’ freedom of association and labor. The company’s CSR initiatives with regard to the welfare of employees are highly anchored on the realization of a happy, committed and satisfied workforce.
In the care for employees, the Financial Year 2011 sustainability report notes that Nike embraces the employee welfare through dissociating itself from both forced and child labor. Child labor and forced labor are both unethical and illegal, hence, can result in legal proceedings that can hamper the company’s brand and public image leading to low and unsustainable business performance. The modern-day business environment is highly sensitive to a company’s friendliness to its stakeholders and he environment in addition to the quality of its products, hence, Nike cannot afford to fail in its quest to undertake CSR activities.
Valjakka (2013) notes that Nike believes in a talented, diverse and inclusive workforce that creatively contributes to the realization of a wide variety of super brand products that stay unmatched in the competitive footwear industry. The creation of an enabling environment is central to the realization of a productive workforce and through which the company produces distinctly creative brands. The 2011 sustainability report indicates that the Corporation achieves the CSR of employee welfare maximization through coaching to inspire employee teams, rewarding outstanding employees, developing talent at first sight and sustainable manufacturing among others (Valjakka, 2013). The employee quality and enhancement programs established by the Nike Corporation will greatly help achieve organizational goals and targets with much ease.
Suppliers
The Financial Year 2011 sustainability report indicates that the company has a liberal stand when dealing with its suppliers and wishes to have them understand the need to be responsible in undertaking their contracts with the company’s factories. The responsible behavior expected when dealing with suppliers is such that the company expects them to ensure they observe obvious CSR programs such as environmental care and employee welfare. In its resolve to CSR, Nike understands its inability to change the mode of operation of its suppliers directly but uses its powers to influence the operation of its suppliers such that they adhere to Nike’s code of conduct.
Valjakka (2013) argues that Nike influences the behavior of its suppliers towards embracing its CSR programs that abhor both employee mismanagement and environmental destruction. The concern for the activities of Nike’s suppliers is an initiative that requires all suppliers to take note of the correct standards of both legal and ethical considerations in line with its CSR motives. The company’s concern for the welfare and conduct of its suppliers is important in ensuring it never falls into the trap of accusations of being a beneficiary of failed systems that abuse the rights of employees, shareholders, customers and the environment. The positive influence on suppliers at Nike is realized through the insistence that all suppliers adhere to the company’s codes of ethics and leadership.
Sustainable manufacturing also helps ensure all suppliers comply with the set company regulations that help enhance environmental care and employee welfare. The company also ensures a sustainable supply chain by ensuring suppliers make effort towards embracing clean energy, balance between profits and people in addition to empowering people to fight for their rights at all times. Thus, Nike ensures responsible supply chain programs through the influencing them to abide by the acceptable legal and ethical standards.
According to Lam et al. (2014), Nike has enjoyed tremendous market growth around the world as a result of its innovative creativity in the footwear and apparel industry. The company innovatively embraced CSR as an ideal tool of endearing itself to consumers around the world and this paid off as the company recorded increased sales and profitability throughout various periods as indicated below:
Fig. 1. Collegiate apparel sales growth (Lam et al., 2014).
The figure above is testimony to the continued global market growth at Nike that helps confirm the success of the market strategies employed by the company; of which CSR remains the principal strategy. In the American market, the Nike market growth still keeps rising, showing that the company indeed meets the people’s expectations to help warrant their trust.
Fig. 2: Nike revenue breakdown (Lam et al., 2014).
The figure above indicates that Nike experienced an upward growth in revenues throughout the five years of study, hence, exhibiting a sustainable economic growth for the company which translates to successful market strategies. CSR being the lead strategy employed by the company thus seems very effective in helping the company achieve sustainable revenue and economic growth.
Chapter 5: Conclusion and Recommendations
Conclusion
Corporate social responsibility is an essential part of company operations around the world. Through CSR, companies behave responsibly in running their organizational errands without hurting the environment or those associated with their manufacturing process. The study of CSR is wide and anchors on various models that help categorize the level of involvement of a company in CSR activities in addition to outlining the benefits of CSR to a company’s business sustainability and community welfare. The CSR concept came up from the need for organizations to be responsible for their operations in addition to giving back to the societies around their regions of operation that help sustain their economic growth and revenue flow.
There is a global requirement for companies to adhere to some set guidelines that exhibit their commitment bettering the welfare of their employees, environment and society. At Nike, CSR was not a matter of special concern until the revolt against the company due to the revelation of the way it was mistreating its employees and polluting the environment in the 1990s. Nike reacted to a damning report of disregard to employee welfare, forced labor, child labor, low wages and environmental pollution across its various factories in Asia and other parts around the world.
The negative publicity accorded Nike due to the disregard to CSR services around the world led to a major decline in the company’s economic and revenue growth. The company suffered a significant drop in earnings during the tough times of negative publicity and resolved to rebrand itself in line with ethical CSR requirements to help ensure the welfare of employees, community, shareholders and the environment formed the core of its operations. The diligent adherence to the needs of customers helped Nike build its brands around creativity and innovation to help achieve sustainable market growth.
In response to the abuse of employee rights that greatly dented Nike’s brand and public image, the company decided to embrace a CSR strategy designed to help enhance employee welfare and relationship. The company developed codes of leadership and conduct that provided for the care of employees across all its factories. The employee welfare CSR initiative at Nike provided guidelines for sustainable remuneration to ensure the wages accorded employees are commensurate with the services they provided and match what can sustainably be offered by a leading company such as Nike.
The use of child labor and forced labor was abhorred from the company as evidenced by its Financial Year 2011 sustainability report as the company opted to be highly ethical and compliant to all legal employment guidelines. The abolishment of forced and child labor helped alleviate the company’s reputation and its increased care for employee welfare helped enhance its bond with customers around the world. In the concern for employee welfare, Nike is also noted to have enhanced the employees’ freedom of association helping them to share their experiences and boost each others’ creativity and innovation through close interactions and teamwork. Nike additionally trains its employees to help them gain proper skills and experiences that help translate to successful market performance. Motivated employees are a great recipe for organizational success in the modern labor market. Nike embraces the employee motivation technique through its employee welfare CSR and which results in increased creativity, innovation and market performance to help it remain a market leader in the sports footwear and apparel industry.
Business sustainability in the modern world is based on a wide variety of services that companies provide to their employees, customers, quality of products and environmental concern. Nike faced accusations of environmental pollution from its factory operations in addition to the environmental dangers posed by millions of its worn-out footwear around the world. The company realized it could not sustain profitable market operations by only minding of its financial welfare through concern for profitability while ignoring the effect it posed to the environment and communities around its factories. Business was no longer sustainable and the company reputation was greatly hampered by the inability of companies to set strategic corporate social responsibility guidelines.
The decision by the company to set up product recycling services helped it position itself as an environment sensitive corporation and this proved to be an ideal CSR initiative that could largely help rebuild its reputation and brand name. Nike’s Reuse-A-Shoe environmental conservation strategy helped the company recycle more than twenty-eight million shoes globally in addition to helping reduce environmental pollution by a great margin as the dangers of worn-out shoes got mitigated. Various studies reveal that Nike strategized to meet its environmental care CSR initiative using creativity and innovation through which the company could make the best out of the available scarce resources without causing environmental havoc.
Through innovation and creativity, Nike manufactures high quality brands that suit the definite consumer demands and expectations. These brands help meet the company’s ethical CSR initiative of ensuring it meets all consumer demands and expectations. The company fuses transparency to its operational model to help ensure all information with regard to the quality of its brands and its impact to the environment is unreservedly disclosed to consumers to help enhance their confidence in Nike. Additionally, the disclosure of supplier information helps the public gauge the reputation of the suppliers to help check whether they are ethically and legally responsible for all their operations. Supplier information disclosure is particularly important in helping the public analyze whether Nike is indeed a brand that lives to its codes of conduct and leadership across all organizational levels and affiliations. In case the company relies on suppliers that abuse their employees and the environment, it will be assumed the company is indirectly responsible in its operations and this could dent its reputation and economic growth as it will lose customers.
The Nike case study provides a great insight of how companies can engage in CSR in addition to outlining how CSR activities can help enhance company’s reputation and business sustainability. Nike faced accusations of inability to be responsible to its operations in the 1990s as the company was regarded inconsiderate to the welfare of its employees and environment, leading to a widespread condemnation that dented its reputation and market performance. The Organization’s turn around anchored on vibrant CSR initiatives saw it bounce back to economic sustainability that has seen it rise to be a model of reference on issues to do with corporate social responsibility. The Nike case study proves that CSR plays an integral role in boosting company reputation and business sustainability, hence, the need for organizations to embrace CSR in all their operations at all organizational levels.
Recommendations
Nike seems to have largely benefitted from its CSR initiatives especially in terms of gaining corporate reputation business sustainability due to the resultant economic growth. The CSR benefits at Nike are enviable though the company needs to move a notch higher in its CSR activities by setting clear guidelines to help attain market success. Nike needs to set forth guidelines on its level of responsibility to employee issues especially in case suppliers fail to meet employee demands or suddenly pull off the market without meeting employee dues.
The reliance on positive supplier influence can only help the company ensure the welfare of supplier workers is taken care of but cannot help out in case of a professional supplier misbehavior. If Nike for instance shuts down its factory in some country, suppliers will automatically lose their jobs, a situation that will reverberate to their workers. Nike’s workers will benefit from severance compensations but the supplier workers may have to deal with the unemployment shock without cushion. Thus, it is important that the CSR guidelines at Nike strongly run down to their suppliers to help ensure sustainability of all workers across all organizational and supplier levels.
Additionally, this study recommends that Nike adopt clear-cut oversight services across all its factories to help ensure its CSR initiatives are adhered to across all factories around the world. The globalization of the company leads it to entry into various economies with diverse cultures and practices. The cultural diversity that comes with the expansion of the company exposes some employees to challenges like language barriers that may make some of them ineffective in their service delivery and this may lead to harassment. The diversity of the environments of Nike operations make the company susceptible to breaches in its employee welfare CSR initiatives, hence, the need for advanced operational oversight at all levels.
Comprehensive oversight roles at all Nike factories will help the company ensure all its millions of employees worldwide enjoy same services and operational environments just like those in the United States do. With such a strategy, the company will help ensure its codes of leadership and conduct are abided to across all Nike factories around the world. The adoption of these recommended strategies will help Nike enhance its organizational brand reputation and business sustainability around the world in the modern dynamic business environment.
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