This Is Karl Moore of the Desautels Faculty of Management at McGill University with Talking Management for The Globe and Mail. Today I am delighted to sit down with Timothy Deviancy from Leeds University.
Timothy you have been studying corporate social responsibility for a number of years, what are the latest trends in CSR out there?
DEVINNEY - For us one of the real questions has been what we call the vectors of social responsibility. One way to think about this is if a company is going to, let's say, have a performance outcome associated with it's social responsibility, then there has got to be a vector by which that activity turns into money.
One is the consumers, one is the workers, the third is assets, one is financial investment and longevity of the asset base, and the last one is related to risk levels and things of that nature. The interesting thing about this is when you look at each of these individually, almost none of them make any sense.
All of our work on consumers effectively shows that other than very small niche's, consumers don't respond with a higher willingness to pay or greater loyalty. We recently published a paper in Sloan Management Review that looked at individuals choice of job contracts and how they would trade off social reputation, workplace reputation, salary, work conditions, what we found is fundamentally that they don't do this - so the workers don't seem to respond the way they do in surveys.
When we look at investor behaviour, we did a series of studies looking at investor behaviour, we fundamentally found that as individual investors, for example pension fund investors, they did not respond. So what we do is we look at all these little parts, and we actually don't see any of the parts being very clear vectors by which the performance is arising.
MOORE – So why do we see that relationship is none of these vectors lead to that outcome?
DEVINNEY - So my view on this is that a lot of the CSR activities other than the very basic ones, that is if a company is using less energy then that is money to the bottom line and that is kind of a no brainer, but it's also related to what the companies are willing to do in terms of information release.
They are actually competing on their transparency, they are releasing information about their underlying processes and it's actually a signalling phenomenon. It isn't so much doing well by doing good, it's doing well by releasing more information your competitors are unwilling to release.