NGOs as Stakeholders in CSR

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A fresh approach to corporate social responsibility (CSR): partnerships between businesses and non-profit sectors

Niveen Labib Eid and Anton Robert Sabella

Niveen Labib Eid is a Business Lecturer and Anton Robert Sabella is an Instructor, both at Department of Business Administration and Marketing, Birzeit University, West Bank, Palestine.

Abstract Purpose – The aim of this paper is to offer a new conceptualisation on partnership emergence and dynamism between the business sector and the non-governmental organization (NGO) sector from a corporate social responsibility perspective. More specifically, the paper intends to examine partnering behaviour and management from a socio-political standpoint. Design/methodology/approach – The case study approach used in the study utilised data from eight in-depth, semi-structured interviews, with managers from the business and NGO sectors engaged in a large-scale partnership between a Palestinian Cellular Corporation and an NGO. Interview transcripts were analysed using content and narrative analyses. Findings to be presented include reciprocity, corporate constitutionalism and utilitarianism. Findings – The results found in this paper show that partnership has social, political, and ethical dimensions in support of the theoretical framework developed for this paper. More specifically, the results show that the studied partnership is an emergent process, fundamentally concerned with self-efficacy over community welfare, as well as being driven by individual organisational goals. Originality/value – This paper sheds light on certain aspects of partnership that are often overlooked in mainstream research. It does not only highlight the multifaceted dimensions of partnering but also discusses how partnership can be envisioned and practised as inter-organisational relationships. It stimulates a pragmatic understanding of partnership nature and management showing that partnership emergence, direction and sustainability are conditioned by the stakeholders’ socio-political and ethical practices.

Keywords Social responsibility, Partnership, Business enterprises, Non-governmental organisation

Paper type Research paper

Introduction

Social partnerships are believed to be a remedy for several maladies in communities around the world. Community development can become more sustainable with further social partnerships being formed and implemented based on the mutual benefit of partners. Businesses are becoming more attracted to forging partnerships with non-governmental organisations (NGOs), as opposed to public institutions, for the direct impact these partnerships can produce (Ashman, 2001).

Business–NGO partnerships are perceived as a mechanism to fulfil corporate social responsibility (CSR) agenda as well as aiding NGOs in meeting their promises towards the community. An alternative term for business–NGO partnerships are CSR partnerships which are best defined as a strategic collaboration among businesses and not-for-profit organisations in which risks, resources and skills are shared in projects that benefit each partner as well as the community (Austin, 2000). CSR partnerships as a field of study has been extensively studied in Western countries, but less so in developing countries. The assumption that business engagement in social partnerships would create value may not

Received 24 January 2013 Revised 24 January 2013 Accepted 14 May 2013

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hold true depending on the context (Raynard and Cohen, 2003). Jamali and Keshishian (2008) argue that in some developing countries, business engagement with NGOs was driven by self-interest under the business-case paradigm. Palestine attests some initiatives towards the emergence of business–NGO partnerships. A study by the NGO Development Center (NGO, 2009) showed that 62 per cent of surveyed Palestinian businesses engaged in CSR activities with partners including NGOs. However, the sustainability of these activities is yet to be tested.

This study examines partnerships as “inter-organisational relationships” (IORs) (Austin, 2000, p. 70), with the CSR as a context. Contrary to a broad research that examined “why” these IORs arise (motives), this study examines the “how” aspect of these relationships, as they emerge and develop. The paper also highlights a lack of a developed critical conceptualisation about CSR partnerships, except for some few critical studies that described CSR partnerships as political arenas that can be interpreted through the societal reaction of actors involved in the process (Ungericht and Hirt, 2010; Matten and Moon, 2005). The study adopts this latter view, as the paper intends to shed a light on some practical considerations which have not been given sufficient accordance in the CSR partnership management literature.

The following section explores three dynamics that influence and shape the behaviours of partners social, political and ethical.

The social dynamism in partnering behaviour

Organisations do not operate in vacuum; they are considered integral members in social networks wherein they influence and are influenced by other members in their respective social networks (Renouard, 2011). Austin (2000) emulsifies the interaction among network members in his “collaboration continuum” where he shows that the developmental stage of the partnership advances based upon the partners’ quality of interaction. He expresses the partnership development in a linear progression moving from one stage to the other, with emphasis on the social aspect of the relationship. According to Austin (2000), there are three stages through which the relationship evolves: philanthropic, transactional and integrative. The partners’ relationship is found to be weaker at the philanthropic stage, but tends to become conditional at the transactional phase as partners exchange instrumental benefits. However, at the integrative stage, it becomes advanced as partners collaborate based on moral rather than economic drivers. In the three stages, it is the partners’ ability to minimise gaps in their relationship that contributes to effectiveness and sustainability.

Austin’s continuum coincides with what Habermas (1987) and Wadham (2009) have suggested. They both empahsised the voluntary aspect of partnership at the formation stage based on communicative action under an “ideal speech situation” (Wadham, 2009, p. 58). Reuer et al. (2002) highlight the development of roles and behaviours of partners in a more pragmatic context which normally takes place at the post-formation stage. In addition, the theory of “cooperation based upon reciprocity” (Axelrod, 1984) and the theory of “social exchange” (Oliver, 1990) demonstrate the interaction characteristic of partnerships; the behaviour and strategy of one partner is dependent on those of the other partners.

This far, viewing partnerships as organising mechanisms and social networks suggest that the partnership has a social dimension. However, the social construction of partnerships is usually affected by negotiated social norms of the partners themselves and some external stakeholders, leading the partnership to deal with the power, politics and ethics of social actors. This assumption establishes the basis for the critical perspective of partnership management.

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The political dynamism in partnering behaviour

Partnerships have a political nature. Politics is simply the social relations of people within and outside the organisation (Clegg et al., 2008). Wherever a social process like a CSR partnership is evident, it encounters political games. The CSR partnership itself can be a political pastime called an “alliance building game” to gain reciprocal support and social acceptance (Bennis and Nanus, 1985). Generally, politics emerges over the life of a partnership. The partnership process changes when power rests in the hands of those who control resources. The political process either solves or causes tensions when one party needs to change the priorities of the other by mandate or coercion (Bennet and McCoshan, 1993). Similarly, networking with outsiders affects the operations and the nature of the partnership, as it creates new social and political ties that induce change (Berger et al., 2004).

Two main theories are addressed here to describe the political dimension of partnerships: the resource-based view (RBV) and the strategic contingency theory; yet other theories made similar attempts to explain the political process enacted in partnerships, e.g. the constitutionalism theory (Murray et al., 2010) and the legitimacy theory (Davis, 1973). Under the RBV theory, partners considered the most resourceful in a partnership will dictate and influence the flow of the relationship. As such, Pettigrew (1975) and Beer (1976) identified resources like competence, expertise, political access, credibility, sponsorship, resource management and group support (lobbying) as sources of power – the power asymmetry between partners encourage the partner with the most resources to use illegitimate power (internal politics) to achieve illegitimate ends. According to the strategic contingency theory, a situation where the power of NGOs tends to be outmanoeuvred at a point when businesses take precedence to determine the future strategies (Salancik and Pfeffer, 1977; Korhonen, 2002; Smith, 2003). This theory explains how the mobilisation of power in the hands of one partner leads to what Habermas (1987) called “strategic action”; a situation in which goals and decisions are controlled by the powerful partner. In other situations, NGOs sometimes respond by making businesses dependent on their social knowledge using “expertise games” (Bennis and Nanus, 1985).

The ethical dynamism in partnering behaviour

Partnerships in general are assumed to have an ethical side based on the relations of social actors (Buchanan and Badham, 1999). The sustainability of CSR partnerships was found to be influenced by the partners’ ethical orientation. The “integrative” model developed by Nijhof et al. (2008) had the advantage of revealing the ethical and strategic stance of the business and NGO sectors when they come together to engage in social partnerships. The model presents three ethical orientations that are similar to those proposed by Windsor (2006); these include:

1. outside-in (business case) orientation which is based on economic incentives;

2. inside-out (identity/social value-led) orientation rooted in altruistic incentives; and

3. open system (stewardship) orientation based on political incentives.

According to a number of studies (Renouard, 2011; Selsky and Parker, 2010; Galbreath, 2010; Nijhof et al., 2008; Secchi, 2007; Windsor, 2006; Garriga and Mele, 2004; Lister, 2003; Belou et al., 2003; Wood and Gray, 1991), business ethics was a major driver for businesses partnering with NGOs within a context of social responsibility. Table I below classifies these three ethical orientations in which business–NGO partnerships take place.

It can be surmised from Table I that partnerships which subscribe to the outside-in orientation are founded on utilitarian ethics with an over-reliance on individual rather than social interests. As for partnerships that fall under the inside-out orientation, they tend to be initiatives stemming from managerial values and organisational culture that ensure social welfare and partnership sustainability. Finally, partnerships being forged with an

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open-system orientation tend to have political intentions which stress their responsibility as good corporate citizens. This being said, when comparing the three orientations, the inside-out orientation prevails because partners have a tendency to downplay political games and successfully manage conflicts as social welfare being the main driver for partners involved. Partnerships of this kind tend to have a prolonged life cycle with the possibility of becoming independent entities supported by the partners.

This far, and in line with the aim of this research which is to address one of cross-sectional partnerships that of business and not-for-profit (NGOs). Two camps for conceptualising partnerships can be contrasted. One camp places emphasis on visualising the development of partnerships in stages: a mainstream perspective (Van Tulder and Kostwinder, 2007 cited in Kolk et al., 2008; Seitanidi and Crane, 2009; Zajac and Olsen, 1993). The key limitation is that it offers rational and mechanistic approaches to the dynamic nature of partnerships. The processual quality cannot be explored by restricting partnerships in stages; rather, it is better characterised by fluidity (Shaw and Allen, 2006). This is the essence of the opposite perspective that is backed by the roots of the critical research in project management (Lindgren and Packendorff, 2009; Cicmil et al., 2009; Nocker, 2006), hereafter, coined by the authors as the “critical perspective of partnership management”. According to this perspective, the flow of interrelationships is affected by the actors’ behaviours, the timing and the context of the partnership, all of which keep it in a continuous flux (Lowndes and Skelcher, 1998). It visualises the partnership as an emergent process characterised by change. This implies that partnerships are not fixed units, but relationships where all stages overlap when it comes to analysing the process. The emerging nature of projects and thus partnerships is assumed to arise from the social, ethical and political dimensions which were explained previously.

Figure 1 represents the theoretical framework as developed by the authors of this study to help in explaining the behaviour of partners within a CSR context. The framework is founded on the premise that social, ethical and political dimensions are interrelated and interdependent on which the behaviour of partnerships emerges. It is believed, at this point, that partnerships and their consequent economic and social sustainability are the result of how well these dimensions work together. Partnerships, according to the framework, are not assumed to be static; they are dynamic relationships which tend to evolve and change over time as a result of the sociopolitical and ethical interaction. A good match and integration between the three aforementioned dimensions of partners are expected to produce equity, trust and commitment, which in their turn are viewed as the main drivers for the sustainability of partnerships. Although this framework captures the “context” to be a factor in determining the outcome of partnerships, it does not explain explicitly how it influences partnerships, as the study focus is on understanding the behaviour of partnerships within an inter-organisational ontology.

Table I Ethical orientations of businesses partnering with NGOs in CSR context

Ethical orientation Business motives Ethical theory Ethical platform (cross-sectional social partnerships)

Outside-in (business case) orientation

Economic motives: either to control market risk or to obtain commercial opportunities (e.g. direct impact CSR where self-interest hinders partnership sustainability)

Economic theories (utilitarian)

Resource-dependence platform

Inside-out (identity/social value-led) orientation

Altruistic/ ethical and social motives: societal welfare

Theories of managerial ethics

Social issue platform

Open system (stewardship) orientation

Political motives: businesses involve NGOs with the aim of enlarging the company’s social legitimacy and responsibility vacuum

Political and social theories (e.g. relational contracting theory; legitimacy theory)

Societal-sector platform

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Methodology

Case study approach is used to achieve the objectives of this study. The study reports on the results of a case study characterised as a CSR partnership between a large-scale Palestinian Cellular Corporation and an NGO specialised in offering training and capacity development programmes to Palestinian youth. Although case studies encounter major limitations in generalising results, they still can generate practical and theoretical insights about the partnership phenomenon and can explore the partnership process in-depth while retaining its holistic and meaningful characteristics (Yin, 2009; Flick, 1998; Stake, 1995). The case consists of eight in-depth semi-structured interviews with the aim of obtaining judgmental viewpoints about the partnership as a social process or a behavioural event. Six interviews were held face-to-face with key managers in both the business and the NGO organisations. Three managers from each organisation were identified based on their level of engagement in initiating and implementing the partnership. Two additional interviews were held with external evaluators, as they were extensively involved in managing CSR projects and social partnerships. Given the scope of the study, which is to explore the dynamic nature of the partnership as the unit of analysis, data collected were restricted to those participants involved in the partnership.

The studied case was purposefully selected on the basis of being identified as the most original (seven years old) and formal strategic partnership in the Palestinian market as well as comprising two large organisations representing two different sectors (business and NGO) that serve the Palestinian youth.

Collected data were analysed using NVivo to come up with common themes that formed a basis for identifying the social, political and ethical dimensions of the partnership. In addition, validity was enhanced by applying Creswell’s validity criteria; the trustworthiness of the findings was compared with those of previous studies. Finally, quotes made by participants were marked with the type of the organisation (business or NGO) for confidentiality purposes and to safeguard the anonymity of participants.

A critique of the partnership

Emerging as a socio-political process with embedded ambiguity, the findings of the study revealed three main themes in explaining the partnership and how it evolved: reciprocity, corporate constitutionalism and utilitarianism. Respectively, the themes represent the social, political and ethical dimensions.

Figure 1 Research theoretical framework

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Reciprocity

In line with what Axelrod (1984) called “cooperation based-upon reciprocity”, both partners, the NGO and the business, had mutual expectations on which the relationship was formed; the “NGO” was interested in implementing its programme for enhancing employability, requiring the engagement of a local business partner, and the “business” interested in direct-impact CSR projects. Reciprocity among partners was based on a change in social actors, partnership alchemy and sense-making communication.

The replacement of the old management team of the business with a new team had somehow negative consequences on the partnership: change in social actors. This is in line with Austin’s (2000) argument that leadership style and strategic orientation of the top management are key in strategic collaborations, especially at the transactional stage. Managers of the NGO had unenthusiastic attitude towards the replacement of the old management of the business partner which was found to have a long-term strategic CSR orientation as opposed to the new management. According to two NGO managers, the change in social actors resulted in diluting synergy of the partnership, confirming to Battisti (2009) proposition that unconscious psychological processes affect partners’ relationship. Their comments were:

[. . .] the most influential change was when the top management of the business partner has changed [. . .] the former senior directors supported our ideas but the current leaders ceased this support (NGO 2).

[. . .] the former leadership viewed our partnership as a future investment (NGO 1).

Alchemy which explains how partners relate to each other was also found to be a major driver in the partnership. Similar to Nelson and Zadek’s (2000) “partnership alchemy” and Huxham’s (1996) “collaborative advantage”, reciprocal collaboration is based on the assumption that certain outcomes are best achieved collectively in a fashion characterised by complementarity and compatibility. For example, managers in both organisations have developed expectations of reaping anticipated benefits from partnering. The business expectations were to attract and select good performing candidates and enhance its corporate image and visibility. On the other hand, the NGO wanted to achieve credibility and outreach as one business manager commented:

This partnership served us in training and hiring; it also benefited our NGO Partner build a name [. . .] to show donors a real work on the ground (Business 4).

The actors have also elaborated on how the partnership as an organising instrument managed to fill each others’ gaps serving the same group of beneficiaries – youth. Gray (1989) called this strategic compatibility. In this respect, comments from managers in both organisations were as follows:

We completed each other in roles and resources (Business 4).

Our business partner performs our complementary role, they deliver the training and we do logistical services; we depend on each other (NGO 1).

We both had the same views [. . .] similar visions to serve the youth sector, otherwise we wouldn’t have partnered (Business 6).

Furthermore, sense-making communication was evident in the respondents’ depiction of the reciprocal interaction. To maintain a healthy relationship based on transparency, conflict resolution and rational trust, most managers indicated that their communication was transparent to protect the partnership and their interests. Similar to Ring and Van de Ven (1994), the argument that identification of collaborative advantages tends to make communication more of a sense-making process, communication among partners involved explicit articulation of expectations, commitment and constructive criticism. It is also worth

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mentioning that the less powerful partner, in this case the NGO, tends to practise “relational contracting ” (Nooteboom et al., 1997) to avoid tensions as one manager puts it:

We bear more sacrifices [. . .] tensions were quickly resolved as we wanted to keep a good relationship because we need them (business) (NGO 1).

Corporate constitutionalism

The political arena in which the partnership took place and by which its relationship to potential stakeholders was determined is referred to as corporate constitutionalism. According to Murray et al. (2010), the “business” partner did not pioneer constitutionalism, but rather ushered the NGO initiative to partner to avoid the “iron rule of responsibility” (Davis, 1967). The political nature of the partnership has two dimensions: first, solicited engagement which describes the NGO’s political efforts in inviting the business partner to adopt corporate constitutionalism by joining the partnership, as one manager commented:

We wanted citizens to notice the role played by the private sector and emphasise the contributions of their role [. . .] as such we extended our reach and allowed them to take a leading role in building the community as opposed to being criticised for not doing so (NGO 2).

The majority of the interviewees indicated that both partners assisted each other in obtaining social legitimacy. For example, NGO managers confirmed that partnering with a business partner, as in this case, has granted their organisation social legitimacy, while the business partner would enjoy an enhanced social power. This is evidenced in the following comment:

[. . .] being dependent on international aid, our partnership with a local partner –a business- have helped our organisation build trust [. . .] people judge our work by looking at who we partner with (NGO 1).

Moreover, the business partner appeared to influence the partnership at the beginning using different sources of power including legal, financial and expert (service provider) powers. This power imbalance shaped the partners’ interaction in a way that fits what Habermas (1987) termed “strategic action”. On part of the NGO, this was a serious concern:

Our bargaining power was in presenting and enhancing the image, public relations and visibility of our business partner after negotiating the amount of funds we wished to receive (NGO 2).

We were more dominant, we had the right to terminate and modify the agreement (Business 6).

Second is social forgiveness which by definition is a practice used by businesses more than NGOs to regain stakeholders’ trust (Xie and Peng, 2009). In this case study, both the business and the NGO were in pursuit of social forgiveness using the CSR partnership as an alliance-building game. For example, the NGO downplayed credibility gaps by partnering with a national partner–the business – to gain integrity. Likewise, the business utilised the partnership to boost its community relationships:

Our NGO partner facilitated our access to academic institutions [. . .] people in those institutions thought we are only interested in promoting products (Business 4).

The business introduced us to the local market, enhanced our credibility to build a good name; most importantly, we gained social trust (NGO 1).

The business managers also emphasised the importance of separating the partnership from national politics, a practice that was rarely found in previous studies:

Our corporations have to act diplomatically when partnering [. . .] because we want to avoid creating pictures that we support particular political parties (Business 4).

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Utilitarianism

The partnership was characterised by self-interest. Instrumental motives were salient according to the answers of interviewees ascribing the partnership to the “business case orientation” (Windsor, 2006). One main theme was identified in this partnership: “value proposition”. In reference to Austin’s (2000) proposition, this partnership is functioning at the transactional stage (e.g. exchange of instrumental benefits) where partners are concerned with value proposition than value creation. From the business managers’ perspective, the partnership constituted an opportunity to achieve business results with little attention to community welfare. Almost all comments made by business managers stressed the argument made by Porter and Kramer (2002) regarding specific values sought by the business which include visibility, employee attraction, social capital and knowledge transfer:

Our purpose from this partnership was to train and select an elite group of students to join our company, at a cost advantage [. . .] the NGO was truly our bridge to reach and access universities (Business 5).

Frankly, this partnership was a political practice by the business to enhance its visibility [. . .] the business utilised our expertise about the urgent social needs (NGO 1).

This far, the above concise investigation into a partnership between an NGO and a business represents an analysis of the social, ethical and political dimensions that elucidate the basic assumptions underlying partnership thought and practice. Given the complexities ranging from culture-specific factors to individual characteristics, which is beyond the scope of this research, and given the three dimensions that were prevalent within the context of this case study, this partnership to a large degree embodies ambiguity in its nature. As such, the behaviour of the NGO partner demonstrates uncommon practices which contradict the typical view of NGOs’ pursuit of altruistic missions (Belou et al., 2003; Nasi et al., 1997); for example, the NGO’s pursuit of a political gain-credibility overshadowed and surpassed its pursuit of financial sponsorship.

To sum up, this partnership is a clear representation of a social process that took the form of cooperation based on reciprocity, which was observed in the partners’ behaviour of exchanging commensurate values, a theme emphasised in the theory of social exchange (Oliver, 1990). Having a similar interest in serving the young population and the overemphasis on sense-making communication, especially by the NGO partner, has demonstrated further enhancement of the strategic fit between partners as well as sustaining the partnership from its inception. In addition, politics, it is to be observed, were apparent in this partnership and more so in the behaviour of the NGO partner, a behaviour common among organisations by attracting a highly regarded organisation to augment their legitimacy and visibility. Also in this respect, the bargaining power of partners has shifted over the course of the partnership; for instance, during the early stages, the business partner had the upper hand in mobilising the partnership; however, later on, the bargaining power of the …