Paul Holmes 07 Apr 2005 // 11:00PM GMT
Business executives at companies of all sizes see corporate citizenship as a fundamental part of business and central to good business practice, according to a new report from the Center for Corporate Citizenship at Boston College and the US Chamber of Commerce Center for Corporate Citizenship. The two surveyed 515 business leaders from companies of various sizes and from a broad range of industries to examine the executives’ perceptions of the state of corporate citizenship in the US.
Eighty-two per cent of respondents say good corporate citizenship helped the bottom line and 59 percent feel these practices improve company image and reputation. Fifty-three per cent report corporate citizenship is important to their customers.
“Corporate citizenship is widely misunderstood and poorly defined in the U.S., yet we know it is increasingly a differentiator on many dimensions and that companies care and think about it when doing business,” said Dr. Bradley Googins, executive director of The Center for Corporate Citizenship at Boston College. “Corporate reputation, ability to attract and retain an engaged workforce, and a basic license to operate are just a few examples of why companies are engaging in corporate citizenship.
”This survey is a critical first step in understanding the motivations and practices that U.S. companies use to define corporate citizenship at a time when expectations are increasing for business to better define their role in society.”
More than half of the executives surveyed say corporate citizenship is part of their business strategy. But the vast majority believes corporate citizenship should be completely voluntary and not dictated by law.
According to the authors, the results “indicate that business leaders consider their obligation as citizens to be broader than the classic definition of good business practice: returning profit to shareholders, paying taxes and obeying the law. Most U.S. companies say good corporate citizenship also includes meeting ethical, environmental and social objectives.”
Business leaders say they are sensitive to the attitudes and expectations of the public and believe the public expects companies to meet or exceed legislative or regulatory requirements on product safety (75 percent), environmental performance (58 percent) and community support (53 percent). And the public, according to 74 percent of respondents, has a right to expect good corporate citizenship.
Survey participants identify customers (84 percent) and owners/shareholders (79 percent) as the most influential external stakeholders on business decision-making. But two-thirds cite employees as an influencing factor, 40 percent note government influence and more than 30 percent identify local communities and suppliers as influencers.
With a national sample that included small, medium and large size companies, the survey found that size does not matter. The main driver of corporate citizenship is values. Companies see corporate citizenship as good for the bottom line, with the primary obstacle being lack of resources.
“What’s most interesting about this first survey is the breakdown by company size, and while the obvious is true that corporate citizenship efforts range depending on size and budget, there is an overall commitment regardless of size to corporate citizenship as a core business imperative,” said Suzanne Clark, chief operating officer of The U.S. Chamber of Commerce and president of The Center for Corporate Citizenship “There are also well developed views of what constitutes corporate citizenship.”
Forty-six per cent of survey participants say a lack of resources is the greatest obstacle to practising good corporate citizenship. But, despite the economic recession occurring in the US at the time of the survey in 2003, 30 percent of companies said they were increasing investment in corporate citizenship, while 14 percent reported having decreased these investments.
Twenty-three per cent report increased investments in economically distressed communities. And even among the 32 percent of businesses that faced a decline in financial performance, 25 percent increased investments in corporate citizenship, with 17 percent bolstering their efforts in economically distressed communities.
The top community-investment priorities cited by survey participants are economic development and K-12 education.
Most respondents believe companies should be part of the solution to social problems and more than half say their companies should play a role in improving education, healthcare and the development of alternative energy sources.
“Without a deeper understanding of business leaders’ attitudes, those who champion good corporate citizenship are ill-prepared for a more constructive dialogue, one that could potentially move the field forward,” the authors say. “The survey supports the contention that the foundation for this dialogue is present. American companies and advocates agree that corporate citizenship is good business.”
While corporate scandals and abuses have taken centre stage, Barbara Dyer, chief executive of the Hitachi Foundation, which provided funding for the survey says: “Hundreds of thousands of businesses that play by the rules receive less focus.”