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A societal perspective on business and sustainability: A comparison between Nordic and Baltic countries

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A societal perspective on business and sustainability: A comparison between Nordic and Baltic countries
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  A SOCIETAL PERSPECTIVE ON BUSINESS AND SUSTAINABILITY: A COMPARISON BETWEEN NORDIC AND BALTIC COUNTRIES  Ingeborg Nordbø, Associate Professor, Ph.D. Telemark University College, Department of Business Administration and Computer Sciences. E-mail: ingeborg.m.nordbo@hit.no  Birgitta Schwartz, Associate professor, Ph.D. Mälardalen University/Stockholm University, School of Business, 106 91 Stockholm, Sweden. E-mail:  birgitta.schwartz@mdh.se  Abstract The aim of the paper is to discuss similarities and differences with reference to how companies in the  Nordic and Baltic countries deal with issues of sustainability and CSR, and how they in this respect relate to actors such as other businesses, governments, consumers and NGOs. Empirically the paper is based on company case studies from Sweden, Norway, Estonia and Lithuania conducted during 2011, 2012 and 2013. A critical perspective related to the theoretical framework was used in the analysis of the companies and organizations. The methods used were interviews and document studies. The case studies demonstrate that the commitment for the companies to deal and engage with sustainability issues and CSR differ according to company size, industry and external factors (customers, NGOs and/or governmental legislation and procedures) which push or inspire the companies towards more sustainable behaviour. Differences are specially observed between the  Nordic countries with a long history of attention towards sustainability compared with the less developed sustainability engagement in Estonia and Lithuania. In this respect, contextual and cultural issues related to the countries different historical heritage and the presence or not of a strong environmental movement are discussed as possible explanations. Push factors for Baltic companies to engage in sustainability issues and CSR seem to be foreign customer demand or issues of being  perceived as modern and western oriented businesses. As such export oriented companies show greater interest and commitment to sustainability and CSR than those operating only in the domestic market which still seems to be influenced by the former Sovjet union mentality. Keywords: Sustainability, CSR, collaborative isomorphism, social context Introduction Sustainable development (SD) springs out of the concern for an environment in crisis (Bebbington, 1999). There are many definitions on sustainable development most, but the most common is from the Bru ndland report (1989) “Our Common Future” which defines it as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (p. 43). Sustainable development has mainly three different dimensions: economic, social and environmental. A sustainable enterprise contributes to sustainable development by delivering simultaneously economic, social, and environmental benefits - the so-called triple bottom line (Hart & Milstein, 2003, p. 56). The concept of sustainable dimension is not new, however, and according to Bebbington (ibid.) it can be traced in ‘Western’ literature since the beginning of the 70s. The emergence of the concept is strongly related to the awaking of an environmental movement srcinating in the West in the same period. Corporate Social Responsibility (CSR) is an element of sustainable development dealing with businesses’ ethical and moral obligations. The CSR approach has been in discussion since the 1950s but it is only from the 1980s that it is getting more organized (Hill, Ainscough & Manullang, 2007). There are a vast number of definitions of CSR, and the United  Nations Industrial Development Organization has defined it as follows “a management concept whereby companies integrate social and environmental concerns in their business operations and  interactions with their stakeholders” (United Nations Industrial  Development Organization [UNIDO], 2013). In general, CSR is understood as a way through which company achieves a balance of economic, environmental and social imperatives, while at the same time taking into consideration the expectations of shareholders and stakeholders. However, CSR meaning varies in different societies, as different social, natural and cultural context call for different sorts of responsibility. Halme and Laurila (2009) argue for instance that in countries, where the government or non-governmental organizations do not provide enough for social necessities, companies need to deal with much higher expectations from the society. The aim of this paper is thus to discuss similarities and differences with reference to how companies in Scandinavia (Sweden and Norway) and the Baltic countries (Lithuania and Estonia) deal with issues of sustainability and CSR, and how they in this respect relate to external actors. More specifically we will look into how the companies understand sustainability and CSR  , the companies’ motivation for working with CSR, how they work with CSR in practice and what are the greatest challenges that the companies face in implementing SD and CSR. Theoretical perspective Since ideas of sustainability and CSR in relation to companies’ responsibility have been developed in the West we now see these ideas being diffused to other geographical areas and contexts by transnational companies, standardization organizations, consultants, NGOs, media and academics which also could be problematic and give consequences when actors from different contexts meet (Kahn et.al. 2007; Schwartz, 2012; Berglund & Schwartz, 2013). Different norms and values  between the actors are for example highlighted when production is moved from Western countries to low income countries were problems of child labour and poor working conditions are handled by codes of conduct or management standards (Schwartz & Tilling, 2009; Egels-Zandén, 2007). DiMaggio and Powell (1983) discuss diffusion and imitation of ideas using the concept of isomorphism. Coercive isomorphism relates to formal and informal pressure, where organizations are forced to adapt to regulatory framework by governments or competitors’ actions. Mimetic isomorphism is when organizations imitate other organizations as a response to uncertainty.  Normative isomorphism relates to professionalization, as managers in the same profession tend to use the same models and methods. The diffusion of CSR ideas could also be seen as a mobilization of corporate actors to assist state development aid or a management trend where, the latest management models are spread by consultants and standardization organizations (Sahlin-Andersson, 2006) with the help of multinational companies into different geographical contexts. As a management trend CSR seems to be connected with presentations and legitimacy and a great deal of decoupling occur (ibid.). The ideas are also in the diffusion process translated into organizations by a transformation of the srcinal idea (Sevón, 1996; Czarniawska & Joerges, 1996). According to Windell (2010) the vague definition of CSR makes it possible to spread, develop and flourish into different organizational and geographical contexts, and to translate the CSR idea into various corporate practices and management tools. In relation to our study of companies from the Nordic and the Baltic contexts the translation of the CSR and SD ideas is dependent on the societal situation and culture. According to Carroll (1979) the expectations that society has on companies can be divided into four categories: economic, legal, ethical and discretionary. Carroll argues that since businesses are the  basic economic units in society they have a responsibility to produce goods and services that the society demands. These are the economic responsibilities of a company and all other business roles come from this assumption. Legal responsibilities are the regulatory framework, within which societies expect companies to fulfill its economic mission. Ethical responsibilities of a company are additional behaviors and activities that are not codified into law, but nevertheless are expected of  business by society’s members. Discretionary responsibilities are purely voluntary. These are, for  example, making philanthropic contributions or training unemployed people. In order to be socially responsible, companies must thus deal with many aspects. Method Empirically the paper is based on company case studies from two Nordic (Sweden and Norway) and two Baltic countries (Estonia and Lithuania) conducted during 2011, 2012 and 2013. The cases were made by students participating at an academic NordicBaltic course, Business strategies and sustainable development given in 2011, 2012 and 2013. The company cases from Finland and Iceland will be included in the next version of this paper. The course was conducted in cooperation  between Mälardalen University in Sweden, Telemark College University in Norway, Lahti University of Applied Sciences in Finland, Reykjavik University in Island, Aarhus University in Denmark, Tallin University of Technology in Estonia and ISM University of Management and Economics in Lithuania. The company cases were focused on how two companies (one large and one small) in the respective countries handle sustainability issues in their daily operations and from a strategic perspective. Also how the companies relate to other business actors and actors in the society for example governments, consumers and NGOs. In the reports from 2011 the case studies also focus on how NGOs interact with the companies and how they strive for a better society. The methods used were interviews, mainly personal but in some cases by telephone, and document studies. The interviews were recorded and transcribed and translated into English by the students. The transcribed interviews of managers and CEOs from Swedish, Norwegian, Estonian and Lithuanian large or small companies are in this paper used by us in analysing how the companies in these four countries handle CSR and SD issues. These transcriptions show how these managers present their companies’ understanding of SD and CSR, their motivations, their practical work and their challenges of dealing with SD and CSR in a societal context. The companies are not only different in size and active in different geographical contexts; they are also active in different industries. The Swedish companies are active in the industries of furniture, construction, flooring, fast food restaurants. The Norwegian companies in the oil and gas industry, fishing, paint manufacturing and speciality coffee industries. Estonian companies are active in the industries of oil shale, energy, water treatment, plastic and window/door production. Lithuanian companies are active in the logistics, transformers/energy, biotechnology, organic food/cosmetics, and fast food restaurant industries. In total 20 companies, five from each country, are included in the study. In the table below the companies are shortly presented. Table 1: Compan ies’  presentations Country Company Industry Business Size Sweden IKEA Furniture Home furnishing retailer. Established in 1943. The business idea is to offer low prices and make well-designed, functional home furnishings available to everyone. The world's largest furniture retailer, approximately 131,000 employees and 287 stores in 26 countries. Interview: Head of sustainability  post in compliance. Large Sweden Tarkett Flooring Multinational floor manufacturer. Established in Sweden 1886, Large  operating in over 100 countries, 9,200 employees. Annual sales 2.1  billion Euros, daily Tarkett sells 1.2 million kvm of flooring. Interview: Environmental and sustainable manager Sweden Max Hamburger Food Fast food restaurant, hamburger chain with own restaurants. Family owned business. Interview: Max Employee and Sustainability Manager Large Sweden STOLAB Furniture Furniture manufacturer of chairs. STOLAB has approximately 27 chairs, 15-20 tables and approximately 20 storage items and around 15 different types of sofas. 60 employees and only produce in Sweden and sell the furniture trough a total of 120 retailers. Interview: Chief executive officer. His main responsibilities are market,  product development and economy (business administration) also to a large extent of CSR issues. Small Sweden Tretum Construction Subcontractor in the construction industry, providing floors and carpets and floor technology competence as Cradle to cradle. Established in 1976, 6 employees, family business. Interview: CEO. Small  Norway Statoil Oil/Gas Statoil was funded in 1972 and is owned by the Norwegian Government (67%). It is one of the 50 biggest companies in the world. On a global scale Statoil is currently the largest oil producer in deep water, one of the world's largest suppliers of oil and gas. Statoil is established in 34 countries worldwide with a total of 29 500 employees. (www.statoil.com) Interview: Statoil’s media contact and responsible for international upstream activities. Large  Norway Jotun Paint manufacturer Jotun AS is ranked as the 12 t  largest  paint manufacturer in the world (Coatings World, 2011). In 2011, the group had a turnover of 14,742 million NOK (2,000 million euros). Globally, Jotun has 8600 employees Large  and 39 production facilities on all continents (Jotun.no, 2013). Interview: Group Vice President  –   Corporate Affairs.  Norway Marine Harvest Fish farming The Marine Harvest group is one of the w orld’s largest producer of farmed salmon. Founded in 2006, when Pan Fish ASA, Fjord Seafood ASA and Marine Harvest N.V merged together. They are operating in some 21 countries and are selling  products to customers in over 50 countries. Aapproximately 5 000 employees around the world. Large  Norway Kaffe- brenneriet AS Coffee bar chain The Kaffebrenneriet stores are combined cafes and a coffee retailer, serving coffee drinks and food, but also selling coffee beans and equipment for people to make their own coffee at home. Kaffebrenneriet AS employs 161  people and 22 in their subsidiary Kaffebakeriet AS. In 2011 the revenue was 26 million NOK (approximately 3.5 million Euros), which resulted in a profit of 2.7 million NOK (approximately 370 000 Euros), making it a fairly successful company (proff.no, 2013). Interview: Marketing Manager Small  Norway Villa Organic AS Fish farming Villa Leppefisk ANS was founded in 1995. Today Villa Organic AS  produces over 15 tons of salmon a year and has a turnover of half a  billion NOK. Villa organic, a part of Villa Corporation, is one out of four fish farmers in Norway that has focused on the development of organic fish farming. Interview: Manager Bio-security/QA Small Estonia Viru Keemia Grupp (VKG) AS Oil shale and oil chemistry. Established in 1924. Private company. VKG is an umbrella brand for eight business units that each has its own field of operation. Biggest unit deals with oil shale. Other units deal with car and railway logistic service, heat supply repairing and assembly services, electric power supply, power networks and mining. Large
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