Doing Good in Society:

A comparative study of the communication of the ethical aspects of Corporate Social Responsibility in Germany and the US


Corporate Social Responsibility (CSR) promotes and incorporates ethical activity in business practices and has been embraced by 90% of Fortune 500 firms in the world. However, the incorporation of ethical behavior into business practices presents many challenges due to the intangible nature of ethics, the varying degrees to which ethical behavior is applied and expected in a given society, and cultural values in a society. Furthermore, CSR is an American-based concept, based on American cultural values and ethical assumptions. Therefore, this comparative study explores the differences in how the ethical components of CSR are communicated in the US and Germany and how cultural values affect the reporting of ethical activities of CSR. By applying a thematic analysis of the top 10 US and German companies’ CSR reports, it was discovered that American companies take a more explicit approach to the communication of ethical components of CSR, focusing on codes of ethics to guide behavior and extensive philanthropic activities to demonstrate ethical responsibility. Germans take a more implicit approach to communicating their ethical behavior and participate in less philanthropic activity. However, the German companies emphasize the obligation of business in society as an equal partner, whereas the US companies stress the importance of corporate social responsibility for the benefit of the company, reflecting a value of individualism in US society.

1 Introduction…………………………………………………………………………….. 5

1.1 What is CSR? ……………………………………………………………………….   5  

1.2 Towards a strategic version of CSR ………………………………………..   6

1.3 CSR in Europe …………………………………………………………………..      7

2 Problem Formulation ………………………………………………………….       9

3 Methodology ……………………………………………………………………….     9

3.1 The Ethical Aspects of CSR ……………………………………………………  10

3.1.1 Defining the Ethical Element of CSR …………………………………….  10

4 Theory ………………………………………………………………………. ……….    12

4.1 Identifying the ethical aspects of Corporate Social Responsibility 13

4.1.1 Blurring the line between ethics and economics…………………… 15

4.1.2 Linking philanthropy as an ethical aspect of CSR ……………….   …..15

4.1.3 Citizenship as a form of ethical CSR…………………………………….   17

4.2 Culture and CSR ……………………………………………………………….        17

4.2.1 Ethics and Cultural Values ……………………………………………….  ….. 18

4.2.2 Understanding ethics in the US and Germany……………………. ……20

4.3 The Reporting of Corporate Social Responsibility ………………… ……21

4.3.1. Channels for reporting ………………………………………………….. ……  21

4.3.2 The Global Reporting Initiative ……………………………………..   ….. 22

4.3.3 Addressing stakeholders through stakeholder management …..   23

5 Data Analysis ………………………………………………………………………….. 24

5.1 Methodological issues: Content analysis, Data sources and Limitations 24

5.1.1 The Data …………………………………………………………………………….   25

5.1.2 Limitations …………………………………………………………………………   27

5.2 Keyword Guidelines for Thematic Analysis ……………………….. ……   28

5.3 Communication of Ethical Aspects of CSR in the US …………………   .28

5.3.1 Ethics and Standards through Explicit Codes of Ethics …….. ……..  29

5.3.2 Corporate Values as a Foundation of Behavior……………………………  30

5.3.3 Support for Human Rights …………………………………………..  ………   31

5.3.4  Strategic Philanthropy: Giving Back to society ……………….  ………  31

5.3.5  Corporate Citizenship through Sustainability and Stakeholder Engagement ………………………………………………………………………. ………    33

5.3.6 Summary …………………………………………………………………..   ………   35

5.4 Communication of Ethical Aspects of CSR in Germany ………  ……….  35

5.4.1 Codes of Conduct and Corporate Governance as Ethical Framework for Behavior…………………………………………………………………………….. …………. 36

5.4.2  Support for Human Rights ……………………………………………………….  38

5.4.4  Corporate Citizenship within a German context ………………………….  39

5.4.5 Stakeholders as Equal Participants ………………………………… …………. 40

5.4.6 Summary ……………………………………………………………………  ………….. 43

5.5 Summary of Communication of Ethical Aspects of CSR in Germany and the US …………………………………………………………………………………………………… 43

5.6 The Effects of Culture on CSR Eeporting in Germany and the US ……….45

5.7 Analysis Limitations ……………………………………………………………………… 46

6 Conclusion ……………………………………………………………………………………..  47

7. Perspectives – Finding value in CSR reporting…………………………………….. 49

Literature List……………………………………………………………………………………… 51

Websites Accessed: ……………………………………………………………………………    53

Appendices ………………………………………………………………………………………..   54

US Company Overview and CSR Report Title ………………………………………..   54

Locations for access to US Corporate Social Responsibility Reports: ……….   55

German Company Overview and CSR Report Title ………………………………..   56

1 Introduction

    At the beginning of the 20th century Henry Ford, maker of American Model T cars and founder of the modern industrial assembly line, stated that the purpose of his company was to “do as much as possible for everybody concerned, to make money and use it, give employment, and send out the car where the people can use it… business as a service.” This idea of business as a service to a society was frowned and mocked for a better part of the 20th century. Yet, by the end of the century the idea of business as a service to society, or Corporate Social Responsibility (CSR) as it is now termed, had been embraced by 90% of Fortune 500 firms. Furthermore the practice of CSR has spread globally from its origins in the US to Europe and is even practiced throughout Asian multinational companies, though in different forms.

    Despite this global spread and implementation of CSR policies, there remains a strong debate on its effectiveness, strategies, goals, and benefits. Milton Freedman, the Nobel Prize winning Economist, believed that the sole purpose of the corporation was to produce profit for shareholders and that “using the corporate resources for any other purpose apart from that of generating more profit (was) a threat to free market Capitalism.” Furthermore, the empirical data linking an improved financial performance from CSR strategies is inconclusive. This is in part because of the difficulty in identifying what exactly CSR is and the difficulty in measuring intangible values such as “social capital” or “better reputation.” Nevertheless, CSR is gaining favorable ground. In 2004, a joint survey by the US Chamber of Commerce and the Corporate Citizenship Center at Boston College reported that 82% of companies believe that CSR helps the bottom line and that CSR should be a priority in their company.

    The practice of CSR raises important societal issues such as the role of business in a society and asks businesses and citizens to reflect on the possible obligations a corporation has to society beyond those of their shareholders. A 2004 study on managers role in strengthening CSR sums up


Min-Dong (2008), p 2


Ibid, p 4

Ibid, p 20

  the overall challenge stating that CSR “challenges the basis and workings of the basic institutions: market, state and civil society.”

1.1 What is CSR?

              As with many definitions in research there is no agreed upon definition of Corporate Social Responsibility.  The mere idea of a company or corporation being responsible to a society rather than solely to the corporation’s shareholders is at the core of the debate and thus has an affect on a comprehensive definition. In a 2006 special issue on the strategic implications of CSR, the editors of the Journal of Management Studies defined CSR as “situations where the firm goes beyond the compliance and engages inactions that appear to further some social good, beyond the interests of the firm and that which is required by law.’”  Their use of the ambiguous and immeasurable terms “appear” and “some” in the definition reflects the ambiguity and difficulty in defining and measuring CSR. Furthermore, different terms for Corporate Social Responsibility also make definition difficult. Corporate philanthropy, corporate citizenship, social entrepreneurship, business ethics, responsible corporation and corporate culture are all terms that have been used in scholarly literature to describe CSR and/or the implementation of various CSR activities.

               Owing to problematic definitions and implementation of CSR activities in many modern day corporations, the field of CSR is still developing and evolving. The debate over definitions, framework, theories, and corporate strategies for implementing CSR and gathering empirical data on CSR continues. Since CSR is still evolving and being defined it is therefore necessary to look at CSR through a multidisciplinary perspective in order to gain a broad understanding of what it means to for businesses to be social responsible.

1.2 Towards a strategic version of CSR

                Behind CSR is the idea that the corporation has an obligation to society and therefore should create corporate policies and strategies to help society. This debate has been ongoing since the


Grit, K, p 97

McWilliams, A.,  Siegel, D. and Wright, P. (2006), p117

conception of CSR. During the 50’s and 60’s a combination of US national legislation protecting consumers and employees and a vocal consumer rights movement led to some of the first practices of CSR. Several books and articles were published on business as a benefit society. CEO’s, aware of the rising dissatisfaction in the general public, began issuing PR statements in an attempt to convey a better image. However, CSR was merely a PR tool used by top-level managers to deflect criticism rather than the integrated strategy it has evolved into today. The main concern during that time, and which can still be argued today, was that CSR took away resources, both financial and human, that contribute to the bottom-line profit.

            By the 1970’s corporations and their managers shifted from focusing on the societal benefit of CSR to the concept of “self-interest.”  If CSR was in the company’s best interest, they would embrace it. This led to a “new rationale” based on the idea that it was in the stockholder’s long- term interest for corporations to be socially minded. Much of the research during this time was based on the rationale that CSR “supported the corporation’s long-term interest by strengthening the environment in which corporations belong to.”  The idea centered on the belief that if the society in which the corporation is situated deteriorates, then the corporation will lose its support and customers. Therefore, it was in the corporation’s best interest to take care of the society.

                However, the idea of “self-interest” was based merely on a concept and had no theoretical basis. The 1980’s brought a period of Reganomics, decentralization and Thatcher governance. It also brought a change in direction in CSR research with several researchers contributing major theoretical basis’ and models for the practice of CSR. This led to better articulated policies and creation of a multidimensional concepts that can be applied to actual CSR policy.

           Despite the breakthroughs in theory and the development of a model incorporating CSR only a few corporations implemented any CSR into their business strategy. The main problem, which still to a degree remains today, was the inability to measure and empirically verify the results of CSR.


Min-Dong (2008), p 10

Ibid, p 12


Min-Dong (2008), p 13

Ibid, p 15

Thus in the 90’s a new approach was developed. Researchers in business management applied stakeholder theory to the concept of CSR with the “survival of the corporation” as the primary motivator, making it more practical for managers to use and apply.” Stakeholder theory had already been in use throughout decades in management studies and when applied to CSR it served as a practical tool to help measure and analyze data. For managers “their responsibilities to employees, customers and government” are easier to define and target than “their responsibilities to society.”

               With the application of stakeholder theory, and thus identifiable actors, more managers and corporations began a strategic, or calculated, approach to CSR. As managers and researchers still aim to measure CSR’s affect on the bottom line, managers and management scholars have begun to focus on the strategic aspects of CSR in order to compete in today’s marketplace.

1.3 CSR in Europe

“Companies seeking to engage in CSR may consider many contextual variable such as national culture, geography, or social and economic morays in deciding which CSR perspective to adopt. As such, how firms ultimately conceptualize and implement CSR may vary widely”

           With the rise of CSR in the US research has turned towards the application of CSR in other countries. Reflecting this shift to CSR practices worldwide global guidelines have been introduced on an international level to guide companies who wish to implement a CSR strategy. An example is the Global Reporting Initiative (GRI). The GRI reports on “economic, environmental, and social performance by all organizations” with participants reporting sustainable progress as regularly as reporting financial progress.” In 2002 The European Union introduced a “Green Paper” that set the initial framework for discussion and research of CSR within a European context. The UN has also issued the Global Compact as “the world’s largest, global corporate citizenship initiative,”


Ibid, p 17

Ibid, p 16

Hartman, Rubin, and Dhanda (2007), p 375 visited 31/05/08

         which aims to build the “social legitimacy of business and markets.” The World Bank also has its version of a global compact called “Corporate Global Citizenship” which contributes to research and framework on “improving the state of the world through business’s engagement in partnerships that address key global societal challenges.”  While none of these examples offer a specific definition or practice of CSR, they do offer a concrete understanding by using guidelines, best practices, certification and reporting initiatives.

          With the idea of social responsibility in business spreading globally CSR is gaining momentum in Europe. In 2002, the European Academy of Business in Society (EABIS) was established to gain “more and better knowledge and skills on business in society issues.”  Their aim is to “shape and enhance the quality of debate on the role of business in society in Europe” and change the way that interested stakeholders interact and communicate the concept of business as a participant in society. The growth in European CSR can be attributed to a number of factors. Some examples include the increasing awareness among businesses about the economic incentives for being socially responsible, the demand in the market for social responsibility, and the pressure from the political and legislative environment.

              However, the introduction of American CSR to European societies is not without its challenges. Since the concept of CSR lies in the idea of business’s role in society, the application of CSR across cultures and societies is dependent on cultural values. The interaction of various actors within a society (government, business, civil-society, etc) is complex and varies within each country. One nation’s social ills and priorities are not necessarily another nation’s. Moreover, one cultures values are not necessarily another. A nation’s history and laws also influence the application of CSR. Previous research in differences between American and European CSR strategies point out major differences between the two continents within the context of CSR. Though not inclusive, some examples of differences that affect CSR implementation include the role of the welfare state in society’s well being, national legislation and requirements, public vs. private values, individual vs


16 visited 31/05/08

17 visited 31/05/08

18 visited 31/05/08

19 Gilder, Schuyt, and Breedijk (2005), p 143

                communal societies, and the nature of philanthropy. For example, in the US employers (businesses) are required by law to provide health insurance to full-time employees. The company Starbucks began offering health insurance to part-time employees, which is not mandated by law and adds an extra expense to the cost of business. However, this plan was implemented under their CSR initiative, as accessibility to healthcare, through health insurance, is a concern for American society. However, in European societies, the state generally provides access to healthcare for its citizens, therefore a policy of corporate health coverage would not be beneficial and not considered in a European CSR strategy. In regards to philanthropy, a 2004 study of CSR in North America, Europe and Asia found that philanthropy, defined as “third-party social and sustainable development initiatives,” is more prominent in North America than in Europe. These cultural distinctions between society’s expectations are a key component when comparing US-European CSR approaches.

              A 2007 study in the Journal of Business Ethics on the communication of CSR by 16 US and European multinational companies, points to a “growing trend towards holding corporations responsible as corporations for their impact on the social fabric of the systems in which they conduct their business.” Despite problems in the measurement of CSR, the varied implementation across institutions, industries, cultures and nations, CSR is a trend that is being embraced, albeit varyingly, throughout modern day corporations in the developed world.

2 Problem Formulation

The World Business Council for Sustainable Development defines Corporate Social Responsibility as the “continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large”. However, the incorporation of ethical behavior into business practices presents many challenges due to the intangible nature of ethics and the varying degrees to which ethical behavior is perceived in a given society. Furthermore the degree to which


Matten and Moon  (2004), pp 7-9

Ibid, p 6

Ibid, p 41

Hartman, et al (2007), p 375

Ibid, p 373

Micheal (2003), p 115

businesses implement ethical programs and communicate them differs according to cultural values in a society. Using Germany and the Unites States as a basis, this study therefore asks:

How is the ethical component of CSR being communicated to stakeholders? How do cultural values affect the reporting of the ethical dimension of CSR?

3 Methodology

This is an explorative and comparative study to identify cultural differences between the US and Germany in the communication of the ethical component of CSR. To identify how the ethical component of CSR is communicated to stakeholders, a definition of ethics is offered along with an overview of ethics within the context of economics. Then Carroll’s model of CSR is reviewed to identify and explain the ethical aspects of CSR. To understand the relevant cultural differences between the US and Germany and how they affect the reporting of CSR, a review of Hofstede’s cultural dimensions theory is presented along with a brief analysis of the role of business ethics in US and German society. Next, an overview of CSR reporting is presented to explain how the ethical activities of CSR are being communicated. Stakeholder management theory is presented to understand whom the reports are targeting and the role of stakeholders as beneficiaries of CSR activities.

        The data for the analysis is obtained from the annual CSR reports taken from the top 10 corporations in both Germany and the US. Then the reports are coded using content analysis to present a cross-cultural comparison of ethical aspects of CSR as they are communicated in the annual reports.

        The following sections explain the relevant definitions, theories and framework as described above. Following those section, the analysis will return to the data collection and explain the role of content analysis as a research methodology for evaluating qualitative data, elaborate on the data chosen for analysis, and define the keywords necessary for the thematic analysis of the communication of the ethical aspects of CSR in annual reports.

3.1 The Ethical Aspects of CSR

           For scholars and managers alike, the questions of how far a business or corporation should go to help society, take part in society, or even if business is obligated to society, remain unresolved. Researchers refer to the founder of CSR, Howard Bowen, and his book “Social Responsibilities of Businessmen” as the first “attempt to theorize the relationship between corporations and society.” Bowen was interested in the responsibility of businessmen to society.  According to Bowen, CSR was “the obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society.”

           The challenge to understanding CSR is rooted in the combining of two different political philosophies: economics and ethics. Both ideas are pervasive in our societal make up and influence our lives significantly. Both concepts are imbedded in current CSR approaches. However, economics is a measurable and tangible concept: a company produces a good, sells it, and makes a profit. Ethics, on the other hand, is harder to articulate, define, apply and measure. It is personal and varies by society. How does one measure “doing good?” Moreover, how does one apply the concept of “doing good” in a company? This combination of economics and ethics, tangible and intangible concepts, in one framework is a problem researchers and corporations face when implementing CSR programs.

3.1.1 Defining the Ethical Element of CSR

Ethics is a “system of value principles or practices” and a tacit classification of right and wrong. Thus, a company’s “ethical responsibility is influenced by the values of society.” Ethics as a business strategy manifests itself in some firms as a code of ethics, mission statements and codes of conducts. As more businesses operate in a global environment, the study of ethics and its value in different cultures and their relationship to business becomes relevant.   Values within a given culture “represent the implicitly or explicitly shared abstract ideas about what is good, right and desirable in a society.” Since these values are shared, leaders within a society (for example law


26 Min-Dong. (2008), p 6

27 Ibid

28 Joyner and Payne  (2002), p 301

29 Ibid

30 Carroll (1998), p 4

31 Schwartz (1999), p 24

makers, heads of civil society, CEO of corporations, etc.) use these values for justification of their behavior and activities.

Traditional economic rationale is traced back to Adam Smith, the founder of modern capitalism. In the Wealth of Nations, Smith writes:

“Every individual necessarily labors to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much his promoting it… he intends only his own gain, and his in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good.”32

According to Adam Smith, and scores of others who interpret his writings and apply it towards modern economic theory, self-interest is beneficial to society. Therefore there is no need for additional promotion of “public good.” Furthermore, the ideal conditions for economic growth occur when “capital allocation for production and distribution of wealth operates under conditions of relatively free and competitive markets within minimalist public policy.” If markets are left on their own, with minimal interference by the government or State, then the market will benefit shareholders and society as a whole. The goal of the corporation is to increase shareholder profits and nothing more.

This view is shared by classic economic theorists as well as those who argue against CSR. Since the downfall of communism, capitalism has become the dominant market theory with no challenger. However, in the last several decades capitalism as the dominating force has been challenged due to pervasive problems in society that are increasingly linked to unregulated corporate power. The examples range from environmental ills, such as oil spills, local pollution and global


32 The Economist  Profit and the Public Good. 11/22/2005

33 Windsor. (2006), p 99

warming, to societal problems, such as the lack of affordable medicines in developing countries, to human rights, such as labor standards in factories. Businesses are doing harm to what society deems valuable (i.e. environment, human rights). This leads to consumer protests, formation of consumer/civil activist groups, and consumer boycotts of products and services. Society is demanding ethical responsibility from businesses.

         Furthermore, it is argued that frequently the market is only studied “autonomously” apart from society. However, there are “many complex and mutual relationships between the economic system and the others systems – political, cultural, religious, legal, etc – that form society.” Therefore, the market cannot be left on its own and the study of the relationship between market and society, including ethics and economics, leads to a merging of these concepts.

       Recognizing this change in relationship between market and society, which has also been referred to as a “moral marketplace factor,” scholars and businesses are now beginning to combine the idea of ethics and economics. In a review of the business ethics industry, a researcher explains:

“Economic ethics looks for new ways in order to strengthen capitalist rationality: indeed, the idea is to direct behavior and to bend the individual according to the postulates of market economy, and at the same time to smother disloyal and unforeseeable attitude, that would, by the way of generalization, endanger the viability of the system.”36

  This viewpoint summarizes the economic rationale for companies engaging in CSR. To ward off “disloyal and unforeseeable attitudes” that would “endanger” the system, economic ethics seeks to incorporate a sort of ethical behavior into the market. This is reflected in the Code of Ethics that is frequently presented by US corporations as an anticipatory projection. They are portraying their business ethics to society in hopes to be perceived by society as ethical and therefore avoid any potential trouble that may disrupt shareholder profits.


34 Argandona (2004), p 191

35 Hess, et al (2002), p 8

36 Galavielle (2004), p 11

          However, it should be noted, that not all societal ills are the fault of the market and its actors. Some of society’s problems revolve around the diminishing role of the state in societal affairs such as the failure of the government to resolve pollution or introduce labor protections. Those who advocate for a greater role in society for businesses generally see the government as failing to intervene and are therefore looking for a new alternative.

          The merging of economics and ethics is indeed difficult however theories and approaches are moving in that direction. The ideal goal in CSR is a win-win situation, in which the economic and ethical practices are combined, thereby benefiting both the company and society.

4 Theory

Carroll’s model of CSR is explained in the following section to identify and explain the ethical components of CSR. Following, a review of Hofstede’s cultural dimensions theory is presented along with a brief analysis of the role of business ethics in US and German society is presented as a framework for understanding cultural differences in the reporting of CSR. Lastly, an overview of CSR reporting is presented to explain how the ethical activities of CSR are being communicated. Stakeholder management theory also serves as a framework for  understanding whom the reports are targeting and the role of stakeholders as beneficiaries of CSR activities.

4.1 Identifying the ethical aspects of Corporate Social Responsibility

Though the ideal situation of combining economic and ethical practices for a win-win situation is possible, the challenges lie in the how a company interprets their ethical responsibility to society. One company may perceive an ethical CSR activity as having a strategic philanthropic value with the goal of return on investment, while another may consider ethical programs as an obligation of business as a participant in society. There is an abundance of theories, approaches and terms in the field of Corporate Social Responsibility. Among the theories this is considerable overlap. To identify the ethical component of CSR an understanding of the different dimensions of CSR is needed.


37 Hillman and Keim (2001), p 125

Carroll’s Three Domain Model of CSR will serve as a tool for identifying and understanding the ethical dimensions of CSR in the annual reports.

                Carroll’s model identifies three areas of responsibility that a company can engage in: economic, legal, and ethical. These dimensions categorize the different motivations behind companies CSR activities.

Fig 1Three-Domain Model of Corporate Social Responsibility (2003)38

The economic domain refers to the company’s responsibility as an economic provider in society. The sole purpose of economic CSR is to increase profits or share value. For CSR activities in the economic category, all programs implemented have the goal of maximizing profits for the good of the company. CSR programs in this category have a self-interest basis.  Despite lack of empirical data suggesting a higher financial performance, businesses have an economical incentive  


38 Schwarz and Carroll (2003), p 509

39 Ibid, p 508

to invest in CSR. The value cannot be measured and is intangible in nature. The benefits of economical CSR are in the form of increased competitiveness, new market opportunities, better brand recognition and reputation, stronger stakeholder relationships and better long-term interest strategies. This is the strategic CSR for which the corporation must “integrate a social perspective into the core frameworks it already uses to understand competition and guide its business strategy.”41

                  The second domain, legal, refers to the response by businesses to adhere to mandatory laws and legal expectations of the society in which it is based. Companies implementing legal CSR activities have several motives; a decision to implement more transparent and open accounting practices may be to comply with new government regulation, or to avoid litigation, or even to anticipate future laws. A company that states in its annual report a zero-tolerance policy for bribery in the contact process is a reflection of the legal domain of CSR. However, integrating anticipatory legal compliance into corporate strategies is not always a favored approach to CSR as classic economic theory advocates for little government regulation and stipulations for businesses. Government regulation is thought by classical economists to interfere with the free market and hinders a company’s competition in a global market. Nonetheless, the legal domain of CSR is a strong motivation in some cases as recent high profile accounting scandals demonstrate.

               The ethical domain of Carroll’s model signifies the “ethical responsibilities of business as expected by the general population and relevant stakeholders.” The ethical activities of a company are also those that go beyond profit making and legal compliance.

The three dimensions serve as a framework for understanding CSR. However, it is the ethical aspects of CSR that this study is concerned with therefore it is essential to present the differing ethical approaches within the ethical domain.

Hartman, et al (2007), p 374

Hartman, et al (2007), p 374

Schwarz and Carroll (2003), p 509, 510

Carroll (1998), p 2

Schwarz and Carroll (2003), p 511

            Carroll identifies three ethical standards within the ethical domain: conventional, consequentialist, and deontological. The conventional ethical standard is based on the moral philosophy of relativism; what is required by businesses is determined by societal norms. The limitation of this standard is that the norms will differ between societies and societal groups. In the business case of ethical CSR this means that the stakeholders involved in a given society will need to set the norms to determine what is ethically acceptable. As the authors put it, “context matters when deciding what is right and wrong.” Examples of the use of relativism in ethical CSR are the formal codes, such as a code of conduct or code of ethics, present in an organization that demonstrate their ethical intentions.

           The second standard is termed consequentialist which focuses on the “end or consequences” of ethical practices. For the use of CSR this standard involves the moral responsibility of promoting “the good of persons.” More specifically, the focus is on the results of the ethical activity. Is the ethical activity promoting the good of society and is society receiving the greatest benefit? In this standard the utilitarianism of ethics is understood. Thus, such consequentialist ethical activities implemented are supposed to increase the public welfare and common good.

           The last term is called the deontological standard. This standard is the opposite of the consequentialist approach in that it embodies “those activities which reflect a consideration of one’s duty or obligation.” Thus, the result or consequences of the ethical activity is not the focus, rather the ethical activity is based on innate morality, justice and rights. It is the duty of the organization to engage in the ethical activities regardless of the outcome.

         All three terms reflect the complexity of ethical dimension of CSR. Depending on the standpoint, such as relativism or utilitarianism of ethics, the interpretation of what constitutes an ethical activity varies.

Schwarz and Carroll (2003), p 511

Schwarz and Carroll (2003), p 512


4.1.1 Blurring the line between ethics and economics

Returning to the economic, legal and ethical dimensions identified in Caroll’s model, it is important to consider that these dimensions often overlap in the practical application of CSR. These domains are represented in a Venn diagram (pictured below) reflecting the overlap that is normal in the practical application of CSR. For example, a company can implement an economically beneficial and responsible program, such as transparency in accounting, which both benefits the company economically and complies with the legal regulations of the society in which the company operates. On the other hand, a company may chose to implement a program that comprises only ethical and economic dimensions. This is often the case in CSR programs as reflected by the oft-repeated phrase “good ethics is good business.”

4.1.2 Linking philanthropy as an ethical aspect of CSR

The model presented above is based on Carroll’s previous research in the theoretical field of CSR and is actually a revision of his first model. His previous model, Carroll’s Pyramid of Corporate Social Responsibility, had four dimensions: economic, legal, ethical and philanthropy.

Ibid, 516

Fig. 2 Carroll’s Pyramid of Corporate Social Responsibility (1991)

          The philanthropy category was considered a desired activity by society and embodied the idea of being a “good corporate citizen.” Philanthropy is a company’s contribution to a society and can be in the form of financial and in-kind donations. It can be practiced by individual people in a society, corporations or foundations. This category was eventually dropped in the new model because researchers identified several problems in the both the theoretical implications of this category and the practical application of it. Since the philanthropic activities category was termed “discretionary” meaning that companies could decide to use philanthropic resources at their own discretion, it could not be termed a responsibility, nor could it be considered a duty that an organization must adhere to. In addition, the category was also problematic due to theoretical underpinnings. Philanthropy can be classified as an ethical principle of utilitarianism. Philanthropic activities such as donating money to charities or providing training for disadvantaged youth in the community, promote the good of society and reflect the “rule of utilitarianism” where the goal is to “maximize the public welfare.”

                Philanthropy as a dimension was dropped in the new model in favor of incorporating it into either the ethical or economic dimension. The authors indicate that it is difficult to differentiate between philanthropic and ethical activities both in theory and in practice and that sometimes philanthropy can have economic motives. The terms “strategic giving” and “strategic philanthropy” indicate the economic motivation behind philanthropic activities. In recent years the practice of corporate philanthropy has blurred the lines between ethical and economic CSR with many companies having both an economic and ethical incentive to implementing philanthropic programs. In fact, some companies see philanthropy as being “most cost-effective way for a company to


Schwarz and Carroll (2003), p 504


Schwarz and Carroll (2003), p 506

improve its competitive context.”  These activities are generally tied into the corporate strategy and are implemented in order to create a value and return on investment for the company.

     The previous use of philanthropy as a dimension of CSR is important to this study as philanthropy can be considered as another ethical aspect of CSR. Therefore, philanthropic activities that are promoted in the annual report of businesses are analyzed as an ethical aspect of CSR.

4.1.3 Citizenship as a form of ethical CSR

             Corporate citizenship has also emerged as a form of ethical CSR. Ethical CSR is based on the argument that “corporations reap the benefits of serving as a community citizen and therefore owe a congruent contributory obligation to that community.” Therefore the company is a citizen and has an ethical obligation, as all citizens in society, to contribute to the greater good of society. A good corporate citizen goes beyond providing jobs for society and obeying the laws. A good corporate citizen implements charitable programs and adheres to ethical business practices for a sustainable future where business and society can coexist equally.  The business as a citizen approach creates an exchange between companies and their stakeholders, with the company offering support, either financial or non-financial for the community, and an accordance to do no harm in order to operate within the community. However, the degree to which the company participates in the community is of course variable. The justifications of ethical CSR are “embedded in the cultural values and stakeholder expectations to which the organization is subject throughout its maturations process.” These justifications for citizenship are based on societal values and organizations values.

        Based on the model and definitions above it is possible to identify the ethical aspects of CSR. First, the ethical component of CSR can be interpreted in varying ways. The ethical aspect of CSR manifests itself in some cases as an explicit code of ethics, values or mission statements or codes of conducts. Ethical dimensions of CSR can also manifest themselves through corporate philanthropy and giving through foundations. In addition, when the company fulfills an ethical responsibility to


Hartman, et al (2007), p 374


Hartman, et al (2007), p 377

society, it can be termed citizenship, as the company is viewed as part of the community and therefore has an obligation to contribute to the greater good.

4.2 Culture and CSR

Exploring ethics as a whole is a complex process; to study the differences between cultures adds a further challenge. As this paper seeks to identify cultural differences in the reporting of ethical activities between Germany and the US it is important to look at the role of values within cultures and how values differ between them.

4.2.1 Ethics and Cultural Values

         To understand underlying cultural differences and the values that affect them, Hofstede’s theory of cultural dimensions provides a starting framework. Hofstede defines culture as “collective mental programming” that is part of “our conditioning that we share with other members of our nation, region, or group, but not with members of other nations, regions, or groups.” Within this culture lie the values that indicate a culture’s desire for how things “should be.” Hofstede defines values as “broad preferences for one state of affairs over others.” Values are a part of a value system ingrained in the national cultures that is transferred from each generation to the next. What is a value to one culture will not necessarily be a value to another culture. For example, in a society where success and personal ambition are highly valued, economic systems will most likely be competitive.  However, if there is a greater cultural value for group well being then the result will most like be more cooperative economic systems.

          In his early studies, Hofstede identified culturally specific, work-related “value patterns” that were identified through surveys with employees in forty countries. They are described as a set of four value dimensions. The four areas identified were: Power Distance, Uncertainty Avoidance, Individualism vs Collectivism, and Masculinity vs. Femininity.

Table 1 Hofstede Cultural Value Dimensions

Individualism and Masculinity dimensions will be the framework through which to analyze differences in German and US cultures. Though all dimensions aid in understanding underlying differences, the individualism and masculinity dimensions relate directly to CSR. While the Power Distance and Uncertainty Avoidance dimensions are relevant for studying the difference between

cultural values, their aspects as they relate to the reporting of CSR activities are more difficult to measure and beyond the scope of this paper.

             Each country was ranked on a scale of 0 to 100.  A country with a higher number on the scale reflects a stronger tendency for the characteristic within the given country. The figure below depicts the positioning of the German (GER) and US (USA) ranking within the masculinity and individualism index. In Hofstede’s ranking, Germany is less individualist than the US. Germany scores a 67 in comparison to the US that has a score of 91. While Germany is not as collective of a society as say Ecuador (EQA), it is more collectivist than the US and therefore cultural differences in the reporting of CV may be reflected in regards to this. In the masculinity dimension, Germany and the US are similar with the US ranked 62 and Germany scoring 66. Thus the differences in regards to masculinity values in these two cultures may be slight or none at all.

Fig 4 Hofstede: an individualism-collectivism x masculinity-femininity plot reflecting German and US positioning.

Since CSR involves the interaction of society and organizations that take part in society, the degree to which a culture values individualism and its opposite, collectivism, could affect how they communicated their social initiatives to the stakeholders involved. For example, some collective societies may base their decisions on what is best for the entire community involved, whereas an individualistic society would tend to base decisions on what is best for the individual.

  The masculinity dimension will be useful in understanding how companies communicate CV activities. A more masculine value society may be expected to report on activities with a focus on the specific, measurable achievements of a particular project or with a focus on using CV as means of competition with other companies. In cultures where femininity is valued, there may be more of a focus on relationships created and cooperation with other members of society.

   It must be noted that Hofstede’s dimensions serves as an observation of patterns of a broad range of topics and not necessarily applicable to every subject, such as ethics within CSR. His dimensions serve as a guideline when broadly observing cultural values, especially within an organizational context. However, for the purposes of this study, his patterns serve as a broad guideline for understanding the values in two different societies and cultures. For example, in the reporting of the ethical component of CSR a company with values based in a individualist society context may report more on what is best for the company, rather than what is best for the community. It is possible that the more collective a society, the more ethical decisions will be based on shared values within the community. It is within this context that Hofstede’s cultural dimensions is applied.

4.2.2 Understanding ethics in the US and Germany

Business ethics is defined as the interaction between business and ethics. More specifically, business ethics is concerned with the “good versus bad, fair versus unfair or just versus unjust.” Like many management practices, the implementation of business ethics originated in the US and eventually made its way to Germany. American business ethics are based on the American cultural background. The idea that economics and ethics do not really contradict each other and can be combined is an opinion held by US companies more than German ones. The reason for this lies in the philosophically different approach to morality between the US and Germany. In the US the dominant philosophical approach to morality and ethics is utilitarianism. This is the emphasis on the “consideration of consequences, results, and the overall utility of our decisions and actions.” In contrast, the dominating moral philosophy of Germans is Kantianism, which stresses that ethical thinking it not a utility and is based only on innate principles and duties. This difference in philosophical approach makes the transfer of the American version of business ethics, and all the programs implemented that contain an ethical component, challenging. For example, Germans tend to be surprised that American businesses view ethics as something that can be “managed,” which is a common approach to many problems in the US.

  Germans also tend to be more implicit in their statement of ethical activities; though they may implement ethical instruments such as mission statements, words like “ethics” and “morality” rarely are mentioned.  Ethics is transmitted informally and implicitly in German businesses. In addition, the idea of publicly stating such a private and personal matter as ethics is conflicting; Germans tend to “shelter their ethical sentiments from the public sphere.” By contrast, Americans are generally more public about their ethical statements. Business ethics in the US deal with the notion of ethics within the company in explicit ways such as introducing full business ethics programs or a code of ethics that explicitly states the values and norms of the company for all stakeholders involved.

 Therefore, it is expected that US companies may be more explicit in the reporting of their ethical activities, such as mentioning the company values, while the German companies will take a more implicit approach. This is a necessary framework for understanding the possible differences in reporting of ethical dimensions of CSR.

4.3 The Reporting of Corporate Social Responsibility

The communication of CSR activities is important to all companies engaged in CSR activities. Though critics view CSR reporting as a form of PR to improve company reputation, there is growing expectations for companies to not only partake in CSR activities but to communicate them to the stakeholders involved. For example, consumers, who are a primary stakeholder in any CSR activity, are asking for social and environmental responsibility from companies. They receive a response about these activities in the form of reports or the media who also review the annual reports for reliable information. For the companies, the reporting serves as “evidence of their adherence to CSR and sustainable development concepts.”  In an April 2008 special issue in the Journal of Marketing the editors point out that “a strategic communication of CSR activities to stakeholders is becoming recognized as essential for the success of CSR.” The future challenge for communicating CSR activities are how to think strategically about CSR communication and its risks and how to use different communication tools to meet expectations.

4.3.1. Channels for reporting

The annual report is a document produced by a company that summarizes its activities, financial and more recently non-financial (CSR), to their shareholders. While the non-financial activity disclosure is voluntary, companies are reporting on CSR activities as a way to demonstrate validity of their activities, to portray themselves in a favorable light, and as a response to public pressures. The report is a communication of various corporate social responsibilities towards stakeholders in the firm and is available for download on company websites. The names of these reports can vary using words like “sustainable/sustainability  report”, “responsibility report”, or “social report.” Nevertheless, the idea behind the reports is the disclosure of non-financial activities that companies are providing for the society. They range from environmental activities, to pro-employee policies, to employee volunteering. The report is a basic communications strategy: The company provides a message (social and ethical initiatives) through a channel (the annual report accessed on the website) to a recipient (stakeholders).  The annual report is now seen as more “appropriate when communicating CSR” in comparison to CSR campaigns which can be perceived as a PR strategy only.

      Due to the different practices of CSR between nations and industries, messages conveyed in the report can vary according to whom the report addresses. Generally the reports are intended for the stakeholders, but since each company defines its stakeholders according to their own strategies, the audience differs.

4.3.2 The Global Reporting Initiative

The Global Reporting Initiative (GRI) is the most widely used framework for Corporate Social Responsibility reporting. The framework, called the Sustainability Reporting Guidelines, “sets out the principles and indicators that organizations can use to measure and report their economic, environmental, and social performance.” The GRI has over 1,500 companies from 60 different countries voluntarily reporting on their social and environmental performance. It has become the official standard in global reporting. The guidelines can be used by companies to validate their commitment to sustainable activities, for measuring and benchmarking existing CSR programs and monitoring CSR performance over time. Currently the GRI is developing a “National Annex” that will be soon used in conjunction with the reporting guidelines. The GRI recognizes the challenges in developing a single framework to apply to a variety cultures and societies. Sustainability is situational; each country and society has its own problems and culturally appropriate solutions. Among the questions that the GRI is struggling with is how to “reflect on cultural differences.” Thus they are developing the national annex as a practical solution to addressing the differing cultural aspects of global reporting.

       The alignment with GRI encourages more transparency by providing guidelines for CSR reporting for companies participating in the UN Global Compact. Though there are other reporting initiatives, the GRI is the only one partnered with the UN Global Compact that is “concerned with exhibiting and building the social legitimacy of business and markets.” The UN Global Compact identifies and defines ten areas of corporate citizenship such as protection of human rights, labor rights, environment and anti-corruption, and encourages businesses to align their strategies according to this framework. Participation in the UN Global Compact is not mandatory for businesses; it is voluntary. However those involved are engaged with multiple stakeholders in society to create a dialogue about social responsible business practices.

4.3.3 Addressing stakeholders through stakeholder management

In the literature about corporate citizenship as well as above in Carroll’s model there is a stress on balancing the interests of various stakeholders. Corporate citizenship “addresses the relationship between companies and all their important stakeholders, not just employees.” In addition, since this study’s focus in on the communication of ethical aspects of CSR through annual reports, it is important to explore who the reports are targeting Therefore, a review of stakeholder management theory provides a framework for both understanding the role of stakeholders within CSR and also identifying the intended recipients of the reports.

Stakeholder management theory is popular in management studies in part because of its practical application; stakeholders can be identified, as opposed to identifying the vague term “social responsibilities.” In addition it focuses on the corporation’s effects on multiple actors within an organization and on those who have an interest in the corporation. Stakeholders can be defined as those who “bear some form of risk as a result of having invested some form of capital, human or financial, something of value, in a firm.” Each company decides whom its stakeholders are, however they are typically the shareholders, customers, employees, suppliers, the government and members of the communities where the firm operates. In recent years NGO’s have been added as an important stakeholder as recent pressure from NGOs, who ideally represent civil society, has forced companies to include them in the stakeholder dialogue. It is thought that good relations with stakeholders increases financial performance by creating intangible value in relationships between stakeholders that in turn could be a source of competitive advantage.  In this context, a business’s CSR strategy must include identifying the stakeholders and incorporating their values into “its strategic and operational decision-making process.”

        The disadvantage to stakeholder management is that there is no set of rules that establish which stakeholders’ wishes are granted over another and no obligation to value each stakeholders’ view equally. It is entirely possible that in the application of stakeholder management theory,  “the wishes of one stakeholder (trumping) the interests of another, thereby doing right and wrong at the same time.” In traditional economic thought this could be a concern. However, as society progresses with new policies, new ideas also evolve challenging basic assumptions about markets and institutions.

         In the context of stakeholder capitalism, a contemporary theory on the modern-day capitalism, stakeholders are seen as equal partners. In stakeholder capitalism, proponents reject the current belief that capitalism is based on naïve self-interest, that business and morality are separate entities that cannot mix, and that resources are limited. Instead, they focus on individuals working collectively to create value and meaningful relationships. They see a large array of stakeholders working together in value creation for the benefit of all involved and that stakeholder capitalism is “based on freedom, rights, and the creation of consent of positive obligations.”

      While stakeholder capitalism is indeed an ideal concept, as can be argued about CSR’s lofty societal goals, it does offer a perspective of stakeholder management as a positive form of value creation through relationship building. This paper takes the position that stakeholders, as represented in the annual report, are equal partners working together to form value creation through relationship and dialogue. Therefore, the stakeholder theory will be used to help identify the actors targeted in the reports and examine relevant relationships between the stakeholders. Furthermore, in the context of cross-cultural comparison identified stakeholders can be compared between companies to discover differences in a company’s stakeholder priorities.

            Stakeholder management is a form of relationship building within the community and is also another form of the ethical aspect of CSR

5 Data Analysis

With the annual reporting of CSR activities by companies as a regular aspect of company communications, the annual report produces a wealth of information. The reports are available on websites and accessible to all stakeholders. These reports attempt to communicate the value of CSR activities in order for the various actors involved to decide whether or not they should participate in the actions. Given the abundance of textual information produced by these companies, content analysis is an essential tool for learning more about how the ethical aspect of CSR is communicated to stakeholders in the US and Germany. The first part of the analysis will present and expand on the methodology used to answer the problem formulations, present the data sources and explain limitations to the approach.

5.1 Methodological issues: Content analysis, Data sources and Limitations

            Content analysis is used to “facilitate the critical examination and comparison of the published content.” The reader interprets the text for meanings. This method takes the approach that no single meaning exists within the text and that different readers can interpret the texts differently. In content analysis, it is understood that “all other texts are produced and read by others and are expected to be significant to them, not just to the analyst.” The texts do not exist without a reader and it is up to the reader to create the meaning. The analyst must define the terms and theories, set the framework for research, and have an identifiable research question. Within the context of communication, researchers can use a content analysis of mass communications, such as annual reports, to identify such things as “how certain values, prejudices, cultural distinctions, and reality constructions are distributed in society.”

              In order to identify ethical dimension as it’s communicated in the annual report, a thematic analysis through coding of the CSR annual reports is used. Coding is the most common tool used for “whole-text analysis.” Identifying themes is a coding task and entails the researcher looking metaphors, actions, assumptions, and repetitions of words or keywords to identify meaning. Themes are “abstract constructs” and the process of coding involves an inductive approach. Researchers begin with general themes derived from relevant literature and add more themes as they are discovered in the analysis. In other words, “coding is analysis.” Using a key-word-in-context approach aids in identifying themes within the whole text.  The key word approach is simply a way for the researcher to identify previously defined words in a selected text as it relates to the defined framework and theory. These words are presented in concordance, meaning they are presented along with the sentence in which they were imbedded in order to preserve the context. Then the key words are reviewed within their context looking for themes using a coding approach

5.1.1 The Data

The data is taken from the annual reports of the top 10 companies in Germany and the US as ranked by the Fortune 500 global companies annual list. The Fortune 500 list of companies is produced annually and lists the top companies by gross revenue, sorted by industry and country. The list compiles only publicly available information on revenue, so private companies are excluded. Since the scope of this study is limited in size, the Fortune 500 list serves a helpful tool for identifying top company performers in the two countries compared. The companies are identified and then the most recent annual report is selected for analysis from the company’s website. The top companies are large in size, multinational corporations (MNC) with a global scale and operation, and have a high amount of financial capital and revenue. This automatically excludes small to medium enterprises (SME) from the list. The list is from the year 2007, the most recent year available for both countries. Though these companies may have different CSR strategies based on their industries, the intent is to provide a general overview and comparison of companies of different cultural origin. It is not within the scope of this study to analyze differences between industries.

          The two figures below list the top ten companies in the US and Germany, along with revenue, rank and location as calculated by Fortune 500.

Figure 5 Germany’s top companies by revenue.

Figure 6 The US’s top companies by revenue

Though half the companies analyzed will be German, all annual reports are presented in English. Even if a German version is offered, the English version will be chosen due to the limits of this author’s language ability and lack of translation resources. The weakness of this approach is that some meaning may be lost in translation and perhaps cultural aspects that can be imbedded in one’s native language are lost. However, as English is the business language of the world and these are large corporations who are used to producing reports in English on the global scale, it is thought that this should only be a minimal problem. Furthermore, the global reporting guidelines are in English and therefore it is appropriate to review annual reports in English in regards to those guidelines.

5.1.2 Limitations

As this methodology requires an inductive approach and therefore relies on the subjective judgment of the researcher, it is recommended to have multiple coders analyze texts to determine if the “constructs are shared” and if “multiple coders can reliably apply the same codes.” Reliability in any experiment is defined by the ability to reproduce “the same results on repeated trials.” However, due to the scope of this project, only one coder will be used, thus creating a limitation for this study.

             Furthermore, while it can be argued that ones personal prejudice and understanding of the CSR annual reports renders the research subjective, and possibly invalid when considering the desire for objectivity in science, the use of Gadamer’s hermeneutics offers a line of reasoning behind this approach and offers a counter argument.

            Gadamer views hermeneutics as an approach to the understanding and interpretation of texts.  Hermeneutics is commonly used to understand another point of view or present a first person interpretation.  Gadamer presents a way of understanding that is based on mastery of language and common understanding between text and reader.  He contends that through language we understand the world and share a common horizon in which our prior experiences contribute to our understanding of that world.  This concept is likened to a conversation between two people. A conversation is an “exchange” between people, where the both seek to reach an understanding, or an “agreement,” based on a common language, and that understanding is being formed as the conversation progresses through interpretation.  Thus, understanding is based on interpretation.  Gadamer views understanding as a “negotiation between oneself and one’s partner in the hermeneutical dialogue.”   In Truth and Method, Gadamer states “All understanding inevitably involves some prejudice.  Often, especially with natural sciences, precautions are taken to ensure complete objectivity.  However, Gadamer views prejudices, or prior experience and knowledge a person has prior to interpretation, as part of understanding and therefore essential to interpretation. These “projections” enable a person to validate and legitimize the text, or object of interpretation.  Through the interpretation of a text these projections or prejudices are challenged and constantly re-evaluated in order to create meaning. Therefore the reader, rather than being hampered by subjectivity, can use this prior knowledge to better understand a text. Gadamer adds that “a person trying to understand a text is prepared for it to tell him something;” though one must remain open to the whole of the meaning as to not be blinded by our own prejudices. Understanding involves a constant renegotiation of ideas and meaning that the text or person presents, with the negotiation process being based on previous ideas and meaning.  He also states the meaning “can not be understood in an arbitrary way.”  Therefore, meaning derived from the interpretation of a text, even if based on previous knowledge and projections, is valid and useful.

5.2 Keyword Guidelines for Thematic Analysis

      The previous sections explained the methodological approach of this study using thematic analysis based on keywords identified by the researcher within the framework of presented theories and definitions. The next section presents the compiled keyword list that will guide the thematic analysis of the US and German annual reports.

      Based on the theoretical examination in previous sections, a keyword table can be created to guide the thematic analysis.  The words in bold reflect the categories of the ethical aspects of CSR as discussed in previous sections. The words listed in the second column are the words associated to that category based on a reading of the theories and definitions.

Consistent with the methodology of thematic analysis, these keywords will be used to code the annual reports. The keywords will then be analyzed within the context of the sentence or paragraph they are imbedded in and reviewed for ethical themes as they relate to answering the problem formulation. The following sections present the thematic analysis of the communication of ethical aspects of CSR and Germany.

5.3 Communication of Ethical Aspects of CSR in the US

Using the keywords for thematic analysis, the communication of the ethical aspects of CSR in the US is reflected in the form of explicit statements of ethical standards and codes, expressions of core corporate values, support for human rights, strategic philanthropic programs, citizenship initiatives and stakeholder engagement. The following sections present a breakdown and review of these approaches as communicated in the US company’s CSR reports.

5.3.1 Ethics and Standards through Explicit Codes of Ethics

        The US companies take an explicit approach to the communication of ethics or ethical responsibility within their organizations. For the US companies, ethics is integrated into the fabric of the organization. Exxon Mobil’s Corporate Citizenship report states, “Operating ethically and responsibly is ingrained in our business culture” and even has an entire section of the report entitled “Ethics.”  Eight of the companies either present a code of ethics or refer explicitly to the code of ethics as guidelines in their organization. Wal-Mart has a statement of ethics that also contains their “guiding Ethical Principles” that help their employees and suppliers with “making the right decision and doing the right thing.” Several companies use the phrase “high ethical standards” to describe their commitment to ethics. For example, Citigroup aspires to the “highest standards of ethical conduct,” Bank of America states that their code stands for the “highest standards of ethical conduct,” and ConocoPhillips states their “adherence to the highest legal and ethical standards,” and AIG has a commitment to conform to the “highest ethical standards.” For many of these companies, ethics is not an implied way of being, but a way of acting; Chevron emphasizes the importance of “working in an ethical manner.” AIG even goes beyond implementing ethics into their corporate structure; they establish community outreach programs to teach university students in 40 countries about business ethics, as well as other business skills.

      One notable theme found within the US reports is the encouragement of employees to report suspected ethics violations. General Electric reports that it encourages employees to have confidence that they can “freely report […] ethical violations.” General Motors has a “GM Awareline” available for employees to use if they observe any illegal or unethical conduct. Imbedded in Wal-Mart’s code of ethics, they encourage employees to “report any ethics violations or suspected violations.”

       Explicit statements of ethics and codes of ethics are used in US reports to communicate the ethical aspect of CSR.

5.3.2 Corporate Values as a Foundation of Behavior

            Though the majority of the US companies have clear support for and commitment to ethics as a guiding aspect of their organization, values also play a strong role in guiding the organizations as Chevron affirms, “Our values guide our work everyday […]The vision and values and strategies described in the Chevron Way serve as the foundation for how we conduct business.”

          Values are frequently stated in conjunction with ethics. One of Bank of America’s defined values is “doing the right thing” which could be considered a layman’s definition of ethics. After Chevron’s statement about values as a foundation for their business they continue: “we conduct business in a socially responsible and ethical manner.” AIG links values and ethics when they report about their Code of Conduct stating, “we are moving from a rules based code to a principles based code to better reflect the values and ethics of all our constituencies.”

             The desire to appear transparent in reporting issues is an apparent ethical value to companies. AIG reports that their corporate governance measures “foster transparency,” whereas ExxonMobil links transparency to high ethical standards and reports working on dialogues that promote transparency and ethical behavior.

                However, it is often difficult to ascertain what each company means by values. The definition of values is shared “principles or standards of behavior.” The values promoted by companies in the reports are wide ranging and do not always fit the traditional definition of value as a behavior. Rather there is a combination of values and corporate values, and often it is not clear how the company interprets the value, corporate or behavioral, and how it is promoted. For example, diversity as a corporate value is a noticeable theme among US companies. Five companies make explicit reference to diversity as a corporate value. Other examples of values promoted are integrity, respect, teamwork and innovation. Integrity and respects are behavioral values. Innovation and teamwork would not necessarily qualify as behavioral values, and could be considered corporate values. Though innovation and teamwork are not directly tied to the ethical aspects of CSR, the inclusion of ethical elements, such as integrity and respect, into values in conjunction with corporate values reflects the importance of ethics as a value within US organizations.

               Even though the US company’s interpretation of values is a bit vague, it is clear they are trying to communicate company values as a part of ethical corporate responsibility.

5.3.3 Support for Human Rights

             Support for human rights plays a strong role as an ethical aspect that companies communicate in their reports. All companies had a statement or section about their respect for and support for human rights. Many of the companies who report on human rights refer to concerns about respect for human rights within their supply chain. Since these are global companies they are concerned about the treatment of human rights with their suppliers who are often located in developing countries. Concerns about child labor, forced labor or unsafe working conditions are reported frequently thus requiring a statement about the company’s support of basic human rights. Exxon Mobil, Chevron, Citigroup, ConocoPhillips, and General Electric all chose to promote their explicit commitment to the UN Declaration of Human Rights and the Fundamental Principles and Rights at Work of the 1998 International labor Organization (ILO) Declaration in their reporting. Other forms of supporting human rights are conveyed in the reports as support for HIV/AIDS initiatives, providing insecticide coated mosquito nets to halt the spread of malaria in high-risk areas, protecting fresh water rights and protecting indigenous people’s land. Bank of America asserts that they will not finance any operations that will negatively affect the livelihoods or “cultural integrity” of indigenous populations.

            Though many of these measure are community initiatives, which will be addressed in a later section, the motivation behind the reporting of these activities is evident: US companies see an ethical value in supporting human rights and therefore are communicating this value in their reports. Furthermore, companies not only communicate this value through reporting but through training and awareness programs for employees and suppliers. Chevron states, “we continued to inform and educate our employees about our commitment to human rights.” Exxon Mobil is developing human rights trainings for their employees worldwide.

            Supporting human rights by expressing support for international charters, implementing programs that improve human rights, such as access to health care and disease prevention, and training others in the importance of human rights is another way that US companies fulfill their ethical aspect in CSR.

5.3.4  Strategic Philanthropy: Giving Back to society

          Philanthropy is a prominent component of the ethical aspects of CSR in US companies. Philanthropy, which is also referred to in the reports as Corporate Philanthropy or Corporate Giving, is an integral part of US CSR activities. US companies see philanthropy as a form of community investment. General Motors considers its philanthropic activities as a contribution to “community life.” Philanthropic activities take the form of volunteer programs, scholarships, sponsorships and grants (corporate giving) and disaster relief. Volunteer activities are when employees contribute company time to participate in activities that help improve the local communities. For example an employee can mentor a student or participate in valuable skill/knowledge transfer to local residents in developing countries. Corporate giving takes place through established foundations that are set up in tangent with the companies themselves. For example, ExxonMobil has a foundation called the Exxon Mobil Foundation and General Motors has the GM Foundation. Both make donations to various causes and partner with other foundations, such as Chevron’s partnership with the CocaCola Africa Foundation, to improve local communities in which they operate.

           Disaster relief is a major theme of philanthropic activities present in US companies. AIG has a non-profit charitable foundation called AIG DRF that contributes to disaster relief in communities around the world. Chevron reported that they helped Indonesian communities recover from floods. Wal-Mart reports that their disaster relief efforts reflect their philosophy of supporting programs “that improve the quality of life” in communities.

            However, philanthropic activity within US companies is strategically planned and often tied to business strategy. Sometimes the companies are direct in their reporting about strategic philanthropy. Citigroup refers to their programs as “strategic community development initiatives.” General Electric refers to the “strategic approach to [the] impact in communities.” AIG is even more direct reporting: “AIG’s corporate giving is integral to creating shareholder value and brand awareness.” This strategic approach is reflected in the extensive reporting of numbers in conjunction with philanthropic activities. For example, Chevron reports spending $119 million in community engagement activities globally. The total corporate giving by the GE Foundation was $219 million and General Motors spent more than $61 million in charitable activities. Although philanthropy, and its activities such as volunteerism and charity, are often thought of as altruistic activities, the reporting of monetary figures reflects the degree to which companies combine business strategy to philanthropic activities. In addition, often philanthropic activities relate to the industry providing the support. For example, both AIG and Citigroup, which are in financial industries, provide microfinance and microentrepreneurship programs as a form of community support.

         Philanthropy and its related activities, such as employee volunteerism, disaster relief and charitable giving, and their strategic goals and economic value are extensively communicated as ethical dimensions of CSR throughout US reports.

5.3.5  Corporate Citizenship through Sustainability and Stakeholder Engagement

      Corporate citizenship, as explained in previous sections, concerns the relationship between companies and all their stakeholders. The idea behind corporate citizenship is that the business has a responsibility to society and therefore has an obligation to contribute to the communities within it operates. In the corporate reports of US companies it is evident that companies see themselves as participants in society. This can be seen first in the language and terms used to describe their involvement: community initiatives, community development and community engagement. The integration of citizenship initiatives into business strategy is communicated regularly within the US company reports. For example, ExxonMobil directly states: “ExxonMobil applies a rigorous approach to corporate citizenship in all aspects of our business, everywhere we operate.” Citigroup echoes this sentiment writing that they integrate “citizenship initiatives into our business.” AIG states that citizenship efforts are “essential to (their) long-term business objective.” At General Electric they make good citizenship “a way of life at GE.”  Wal-Mart acknowledges their responsibility to society though they do not speak explicitly of being a good citizen.

       Sustainability is linked to citizenship and is also a theme used to communicate ethical aspects of CSR. Sustainability in the case of CSR reporting means long-term commitment to society as Citigroup demonstrates reporting that they are “evaluating environmental and social challenges, what we call sustainability issues,” into their mission and they focus on building sustainable communities. ConocoPhillips refers to itself as a “responsible global energy company committed to sustainable development.”

Stakeholders play a major role in US citizenship initiatives. In all of the US company reports the phrases “engaging stakeholders,” “stakeholder dialogue,” and “balancing the need of stakeholders,” are repeated as a component of company citizenship or responsibility. For example, General Electric reports that they are “committed to an open, ongoing dialogue with a diverse set of stakeholders.” Wal-Mart acknowledges an “increasing engagement with customers, Associates (employees), civic organizations, faith groups, government leaders, non-profit groups, NGOs and other concerned individuals.” These engagements or dialogues are based on relationships and partnerships with stakeholders. Through stakeholder engagement ConocoPhillips aims to “create an environment conducive to building trustworthy relationships.” As stakeholders are generally the recipients of these reports, their role and importance is communicated frequently throughout all of the US reports. In the Ford report they have various stakeholder representatives, such as community representatives, write sections that discuss their perspective on how Ford contributes to society. Citigroup also offers a stakeholder section where different stakeholder groups offer their opinions. The inclusion of stakeholder opinion and openness to dialogue reflects the acknowledgment of businesses that they have more than just an obligation to provide jobs for a society; they must listen to other opinions and receive critical feedback regarding the impact that their business has on society.

Though all the companies report on citizenship initiatives as a way to demonstrate responsibility to society and acknowledge the role of stakeholders, often the statements are linked with a statement of how the company benefits. These statements are often linked to an economic benefit. Two statements from General Electric demonstrate this:

“This is not just good for society, it is also good for GE investors, because GE can solve tough global problems and make money doing so.”

“Delivering financial results while investing in a sustainable future is a responsibility we take seriously.”

ConcoPhillips addresses the role of stakeholders and how it contributes to their business success:

“Only by understanding and responding to the opportunities and risks associated with the changing needs and expectations of our stakeholders can we enhance current and long-term profitability”

Chevron suggests that their community engagement initiatives not only contribute to the economic prosperity and improvement of communities where they operate, but that in doing so, it establishes them “as a partner of choice in the region.”

General Motors assert that their education programs “career opportunities, economic development for the community and improve our customer satisfaction.” This link to customer satisfaction is not only represents the economic benefit of their programs, but also that their CSR activities are in response to customer demand. ExxonMobil elaborates on their responsibility to society by stating,

“It is our responsibility to use the company’s earnings to help meet the world’s growing energy needs while delivering value to our shareholders and competitive prices to our customers.”

This economic link is even evident in the language used. In Ford’s report they state:

“The companies that make the high quality products and services that consumers really value – and do so in ways that limit harm to the environment and maximize benefits to society – will be preferred in the marketplace.”


ConocoPhillips, p 10

Chevron, p 26

General Motors,p 7-24

ExxonMobil p, 32

Ford, p 2

Furthermore there is a theme of leadership present in many of the company. Several companies affirm their desire to be a leader in social responsible practices. In Chevron’s vision statement they write:

“At the heart of the Chevron Way is our vision… to be the global energy

company most admired for its people, partnership and performance.”

    General Electric plans to further human rights initiatives by “leading by example.” AIG state directly that their “ultimate aim is to be recognized as a leader in both business and society by making a difference in the communities where we live and work.” General Motor’s goal of leadership is more indirect as they write that their aim is to “be a positive force in the communities where it operates and to work with stakeholders to improve the environmental and social impacts of its business.”

     Citizenship as an ethical aspect of CSR in US companies is communicated as community initiatives with a sustainable, long-term commitment that are developed through stakeholder engagement and dialogue.

5.3.6 Summary

    The ethical aspect of CSR in US companies is communicated through explicit statements of ethical standards and codes, expressions of core corporate values, support for human rights, strategic philanthropic programs, citizenship initiatives and stakeholder engagement. Often these activities are communicated with an economic benefit and as a strategy for leadership in the global marketplace.

    The statements of leadership and those statements that reflect the company’s benefit suggest that the motives behind these ethical aspects of CSR may be more economically motivated. Regardless of the motivation however, there is a significant blurring between the ethical and economic aspects of CSR as the US reports demonstrate.


Chevron, p 7

General Electric, 52

AIG, p 28

General Motors, p 3-4

5.4 Communication of Ethical Aspects of CSR in Germany

    Using the same keywords to guide a thematic analysis, the communication of the ethical aspects of CSR in the German companies is reflected in the form of implicit frameworks of ethical standards, codes of conduct or corporate governance, support for human rights, citizenship initiatives and stakeholder dialogue. The following sections present a breakdown and review of these approaches as communicated in German companies’ CSR reports.

5.4.1 Codes of Conduct and Corporate Governance as Ethical Framework for Behavior

    The German companies take an implicit approach to the integration of ethical standards in their companies. With the exception of one company, Allianz, no German companies mention an explicit Code of Ethics. Rather, they emphasize ethics as a framework for guiding business. When describing corporate social responsibility as it relates to business operations at Siemens, the Siemens’ report states,

    “Corporate responsibility is a strategic managerial process aimed at integrating business, environmental and social performance to create greater value and enduring benefits within a framework of ethical practices.”

Only Allianz mentions a specified ethical code, but it is referred to as the “Code of Conduct for Business Ethics and Compliance.” However, despite not having a code of ethics, all companies have either a Code of Conduct or a Code of (Corporate) Governance. These codes are often tied into the corporate values and integrated into the businesses. METRO’s code of conduct shapes the corporate culture of the METRO Group. At Deutsche Post the code of conduct is made up as a general set of rules and “presented as basic principles governing all aspects of what [they] do.”


Siemens, p 5

Allianz, p 6

Deutsche Post, p 5

Three companies mention adhering to the German Corporate Governance Code. Volkswagen is committed to complying with all suggestions of the German Corporate Governance Code.

Instead of explicit statements on ethics, German companies also place importance on corporate values that are integrated into their business operations. Volkswagen’s “Group Values” serve as guiding principles and METRO’s “Corporate Principles” is implemented as a common system of values. BASF exemplifies this by stating,

“Long-term success requires strategic goals and clearly defined principles. We have therefore established a system of values that is laid down in our Values and Principles.”


Siemens, p 5

Allianz, p 6

Deutsche Post, p 5

    Within these Values and Principles that BASF reports is dedication to committing itself to responsible business practices. Deutsche Post lists accepting social responsibilities as a core corporate value.  At E.ON, social responsibility is one of their five corporate values.

    Elaborating on the theme of ethics and values, DaimlerChrysler writes an essay within their report on the role of ethics and values within their company. However, DaimlerChrysler is a unique company within the data as it is an organization that is a merger of a German and American company from two significant regional automobile producers from two different cultures:  Baden-Württemberg in Germany and Michigan, US. This makes their report interesting as their reporting style reflects two different cultures within one company; DaimlerChrysler terms it, “Two Cultures, One Company.” In the ethics and values essay it is apparent that they are explaining the role of ethics in a detailed manner in order to convey their approach to fit two different cultures. They explicitly define ethics and how they will use it within their company:

           “Ethics – the set of norms and values that a given culture can agree on and that serves as a guide to actions. The binding nature of ethical norms provides a solid foundation for economic, societal and political decisions. Ethical norms enable differentiation between proper and improper behavior, between what is permitted and what should be taboo. Ethics can serve as a guideline not only for individuals, but for large enterprises as well.”

Their report goes far beyond the other German companies as they specifically define what ethics means to a given culture and society. Their definition is based on an agreed set of norms and values that distinguish good from bad. They continue on to explain how ethics can be used within the company:

                “The central notion in value-based ethical action is respect. Other values follow from respect: tolerance, caring, transparency. Given respect, the preservation of human dignity is assured.


DaimlerChrysler, p 20

Mutual respect permits people to live and work together despite differences of opinion or even contradictory goals.”

They link ethics to values, not corporate values; rather they refer to values that are essential to living and working together as a society. This approach reflects their challenges as a company based on two different cultures and the difficulty in combining approaches to communication ethics within they company. Therefore they relate ethics to mutual values. They conclude by explaining how to implement this approach:

               “Managers must learn to adopt the perspectives of employees, customers, supporters, and opponents, and to treat each other with respect. The usefulness of such an approach is tangible. Ethically-oriented companies are especially successful economically, as comparative studies have shown.”

Again, there is no mention of a code of ethics, however they state how mutual values contribute to an ethically oriented company and link it to economic results.

Based on the German companies annual report, codes of conduct and corporate governance provide the ethical framework for CSR activities in Germany.

5.4.2  Support for Human Rights

Eight of the German companies make reference to their commitment to Human Rights and five of them mention that this is done through support of the UN Global Compact or ILO. BASF bases their high standards on the basic rights set forth in the UN Global Compact. Though not specifically tied to values or ethics, human rights is a theme that is tied into corporate social responsibility and is apparent in German CSR reporting. E.ON’s commitment to human rights is based on the UN Global Compact from which they base their core aspects of corporate responsibilities. Deutsche Telekom


DaimlerChrysler, p 20

DaimlerChrysler, p 20

has a Social Charter which “governs how [they] deal with issues such as human rights.” Siemens requires their supply chain to adhere to “fundamental supplier requirement centered on environmental protection and corporate social responsibility.” One of the requirements is the protection of human rights.

  The German companies communicate their support for human rights as an integral part of their CSR practices.

5.4.3 Contributing to Society

          In the reporting of ethical aspects of CSR in German companies charitable giving has a small presence. While none of the German companies call these charitable activities by the term philanthropy, charitable activities in the form of donations, social giving and volunteerism play a role in German companies. Siemens has a program for charitable activities called “Siemens Caring Hands” which engages in “volunteering, social giving and disaster relief.” Deutsche Post states their commitment to social responsibility by providing apprenticeships and internships for youths under 25.

        Foundations also play a role in social giving, however they are not generally a main focus of charitable activity. Deutsche Telekom has a foundation that supports educational systems in Germany and reports capital holdings of 100 million Euro, rendering it one of the biggest corporate foundations in Germany. Deutsche Bank is the exception however, as they have five foundations across the globe which represent their corporate responsibility and “implement the Bank’s global strategy as a corporate citizen.”

Strategic charitable activities however were noticeably absent from German reporting. Only Volkswagen mentioned strategy in conjunction with charitable activities. In this case however, it was an acknowledgement that in the future they “intend to give [their] commitment a more pronounced


Deutsche Telekom, p 11

Siemens, p 8

Deutsche Bank, p 101

strategic orientation.” Currently they are supporting music and sport initiatives as well as nature conservation projects. The absence of strategic initiatives reflects that philanthropic activities may not be a priority in German companies. However, the reflection by Volkswagen could indicate that German companies may be moving towards a more strategic approach.

     It is notable to mention that the keywords foundation, giving and philanthropy were used to identify philanthropy as an ethical aspect of CSR in both the US and German reports. However, in the German reports this turned up less data than compared to the US. Therefore, another keyword, “donation”, was in order to discover any other possible charitable activities. This turned up a few more results with several companies listing the amount of money spent on donations and sponsorships.

While there is not a lot of information on specific philanthropic activities, charitable giving in German companies exists as an ethical aspect of CSR and may be heading into a more strategic direction in the future.

5.4.4  Corporate Citizenship within a German context

Returning to DaimlerChrysler, the US-German merger, the concept of corporate citizenship within a German context is elaborated on and serves as good framework for understanding corporate citizenship in Germany. DaimlerChrysler writes,

     “Corporate Citizenship is a concept German managers – known under this term – are only now learning to understand. It means that a company should fulfill its social responsibility in its immediate surroundings. A facility must participate actively in the life of the community – not only a an employer and taxpayer, but far beyond the limits its business plan would suggest.”


Volkswagen, 36

DaimlerChrysler, p 42

DaimlerChrysler sees corporate citizenship as going beyond the business approach of providing jobs and paying taxes. Then they go on to explain the difference between the US and Germany in regard to charitable contributions:

     “Such commitment has a long tradition in Europe, but even more so in the USA. No wonder: the US public sector plays a more limited role. There has never been a comprehensive welfare state like those seen in Western Europe. Citizens – and with them, business enterprises – are more accustomed to take matters into their own hands to create livable environments for themselves and their neighbors”

     This helps to explain why the content of data in the previous section was sparse; the idea of corporate citizenship through social contributions is newer to Germany due to its welfare state that is expected to take care societal issues.

     However despite the newness of this term, corporate citizenship is still communicated throughout all the reports of other German companies. Their citizenship activities are strategic and integrated into their business structure as sustainable and socially responsible actions that are based on extensive stakeholder engagement and dialogue.

    Siemens describes a corporate citizenship policy that is the “framework governing all [their] corporate citizenship activities.” METRO reports being committed to raising awareness about sustainability and “putting its corporate social responsibility to practice in its daily work.” Deutsche Post elaborates on their understanding of sustainability, quoting the Brundtland Commission’s definition that, “sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” They continue stating,


Siemens, p 46

METRO, p 1

Deutsche Post, p 7

In the long run this can best be achieved by aligning our financial with our non-financial goals and by embedding sustainable practice in our day-to-day operations.”

BASF has four strategic guidelines by which they align their business activities. They report “ensur[ing] sustainable development” as a guideline for their company. Siemens understands corporate responsibility to mean “ongoing commitment to protecting the environment, improving society and promoting sustainable development on a continuous basis.” Deutsche Bank not only reports on the integration of sustainable corporate development in their company but also provides the reasoning behind the strategy:

        “Implementing concepts for sustainable corporate development is becoming ever more important in the face of global competition. Acting with sustainability in mind is not just an issue of altruism.

The reoccurring theme of sustainability suggests companies are considering the long-term aspect of these socially responsible programs. Their communication of corporate citizenship activities as a responsibility towards society is consistent with DaimlerChrysler’s explanation of corporate citizenship.

5.4.5 Stakeholders as Equal Participants

       German companies also report extensively on their stakeholder relations and engagement as responsibility of corporate citizenship. Siemen’s report explicitly:

   We want to implement our corporate citizenship activities throughout the world in the most efficient, highest-quality manner so as to provide lasting benefits to society in the interest of our stakeholders.


Ibid, p 8


Deutsche Bank, p 1

Siemens, p 48

The emphasis on dialogue with the community is pervasive throughout the German reports as German companies place an emphasis on engaging stakeholders through dialogue. Deutsche Telekom’s report states:

      “Corporate social responsibility is a key element in our corporate responsibility communications, enabling us to develop a clear profile for our internal and external publics and encourage our stakeholders to engage in dialog with us.”

Deutsche Bank states that they “highly value the constructive dialogue with clients, social and political organizations as well as non-governmental organizations.”

       However it is also apparent in German CSR reporting that their dialogue with stakeholders is based on existing stakeholder expectations. The explicit language used in German companies’ reports reflect that the reports are produced as a response to stakeholder demands and companies are specifically taking those demands into consideration. BASF reflects this in the statement, “we have developed key contents of this report based on our dialogue with stakeholders.” Deutsche Post reports that they are meeting the demands of stakeholders by offering customers a range of “environmentally friendly products and services.” Allianz also acknowledges the explicit responsibility to stakeholders by writing, “we have a responsibility to our stakeholders – including employees, shareholder and business partners – and of course to the world at large, to continue to learn and adapt our strategies and services.” This statement of responsibility is tied to their commitment to adapting their business strategies to changing expectations of stakeholders. Deutsche Telekom echoes this adaptability by writing that “stakeholders’ expectations in terms of transparency, completeness and the inclusion of existing stakeholder dialogues means we constantly need to fine-tune this medium.”


Deutsche Telekom, p 5

Deutsche Bank, p 6

BSAF, p 2

Deutsche Post, p 30

Allianz, p 11

Deutsche Telekom, 5

   The above statement also reflects a noticeable element of German reporting that rather than just acknowledging that stakeholders have needs, several companies convey that the point of the dialogue is to earn stakeholders’ trust and approval. METRO asserts,

   “The company’s social commitment is intensified by a lively and open stakeholder dialogue, which is deliberately maintained in the spirit of corporate transparency.”

E.ON affirms that “community dialogs help us demonstrate transparency and responsibility while at the same time gaining community support.” In addition, words like trust and neighbor also appear in the reports when referring to citizenship as E.ON also exemplifies:

      “This report focuses on what we’re doing to address the major CR issues facing the utility industry[…] and earning the public’s trust as a reliable corporate citizen of the regions an communities where we operate.”

Siemen’s asserts that they “strive to improve the environmental and living conditions of every society in which it does business as a responsible citizen and neighbor.”

     Volkswagen writes that “through continuous dialogue we involve our neighbors and other stakeholders in company decisions, thereby helping to safeguard against risks to our image.”

       The use of such terms as transparency, trust and neighbor reflects an overall theme in the German company’s reporting of ethical activities: German companies seem to see their company as having an explicit obligation or duty to society and implement activities in compliance with their stakeholders wishes. While this is communicated often as a responsibility or commitment, the above examples suggest that there is a strong acceptance among German companies as businesses as an equal contributor to society. Rather than connecting citizenship activities and stakeholder relations directly to the benefit of the company, the overall view conveyed by German reporting is that businesses have a direct responsibility to society. The following statements reflect this theme:  


METRO, p 32

E.ON, p 27

Ibid, p 2

Volkswagen, p 39

“The business activities of the METRO Group are materially influenced by the environmental concerns and the assumption of sociopolitical responsibility in the communities where we operate our outlets.” –METRO

“Operating in almost every part of the world brings with it specific local responsibilities” – Deutsche Post

“Our presence in the expanding new markets… also puts us under an obligation to conserve natural resources in these countries, to minimize environmental impacts and to be a responsible corporate citizen.” Volkswagen

“Our social commitment is our way of living up to our responsibility as a good corporate citizen. As a world citizen we feel obliged to help solve social problems in the regions which we live an work” – DaimlerChrysler

“We believe businesses have a responsibility to be accountable for their environmental footprint.” – Allianz

“E.ON is well aware of its particular responsibility as a part of the community.” – E.ON

Though the primary motivator of ethical activities in Germans companies seems to be a responsibility to society, there is an acknowledgement of the link between ethical performance and company success. BASF states that “sustainable development means integrating environmental


Deutsche Post, p 34

Volkswagen, p 39

DaimlerChrysler, section: “Editorial”

Allianz, p 8

E.ON, p 47

protection and social responsibility in our business processes so that they contribute to our long-term success.” Volkswagen states that they need to arrange their activities in line with “the principles of sustainable development. Only then will we be in a position to secure our commercial success in the long term.” Deutsche Post states that social responsibility goes “hand and hand with solid financial performance.” Deutsche Bank links them explicitly by stating “Economic productivity, social responsibility and environmental protection are all inseparably linked to one another.” Deutsche Bank sums up many of these themes of partnership, trust and benefit to both society and business by stating:

“It is only by a steady and target-oriented commitment to selected areas that we are able to develop competence and to build long-term partnerships which create credibility and promise success for all stakeholders of Deutsche Bank.”

E.ON furthers this by simply stating, “Good CR is good business.”

German companies seem to communicate a duty to society and out of that obligation they participate in society and engage in a dialogue with stakeholders to win their support and trust. It is with this support and trust from stakeholders that will product an equal benefit for all stakeholders involved, including the benefit to the company in the long-term.

5.4.6 Summary

The communication of the ethical aspects of CSR in Germany is presented in the reports in the form of codes of conduct and corporate governance, support for human rights, charitable donations, explicit statements of commitment and responsibility of businesses to society, and extensive stakeholder dialogue.


BASF, p 17

Volkswagen, p 2

Deutsche bank, section: “Stakeholders”

Ibid, p 5

E.ON, p 17

           German businesses are clear on their view of the obligation of business as a citizen in society. They are contributing to society through extensive dialogues with stakeholders and adapting their citizenship activities in response to this dialogue. The reports and reporting of ethical activities seek to gain support from the stakeholders. While philanthropy is not explicitly communicated, some charitable programs are communicated, though they are not necessarily strategic nor related to the company goals.

5.5 Summary of Communication of Ethical Aspects of CSR in Germany and the US

         The communication of the ethical aspects of CSR in both Germany and the US is through CSR reporting. All companies publish CSR reports for their stakeholders. The stakeholders are determined by the company needs, however common stakeholders in both the US and Germany are the shareholders, the community, NGO’s, employees, and suppliers. Both view the reports as a response to stakeholder requests and as a way to communicate their ethical participation and citizenship activities in society. In some cases in both the US and Germany the reports are part of an ongoing dialogue. The community as a stakeholder and the social activities that the companies implement are the focus of the majority of both reports

               However, the degree to which companies participate and how they view their role in society, differs. The US promotes more philanthropic activities through large corporate donations, volunteer projects and foundations, which are generally linked to strategic business decisions. Though Germany does have charitable activities they are not prominent in the reports nor are they as strategically oriented. However, while foundations do exist in Germany, they play a smaller role in the community than the US foundations. Both reports mention disaster relief efforts and support for human rights through voluntary commitment to international charters such as the UN Global Compact, the International Labor Organization and the UN Declaration of Human Rights. US citizenship activities are linked more to their business strategy and economic benefit. While the German companies realize there is long-term success in including social responsibility into their business activities, they communicate  social responsibility primarily as an obligation or duty. Generally the US companies state that they desire to become leaders within the corporate social responsibility field and present themselves as models for other companies.

             In addition, the approach to communicating ethics within the organization themselves differs between the companies. US companies are more explicit in their integration of ethics into their organizations with codes of ethics, ethical violation reporting and direct statements about adhering to the highest ethical standards. The German companies are more implicit and refer to their codes of conduct and corporate governance as ethical guidelines for the company.

                There is a blurring between the ethical aspects and the economic aspects of CSR in both companies. However, it does appear that the US considers elements of ethical CSR activities, such as community initiatives and philanthropy, as an economic benefit. German companies exhibit this behavior as well, but to a lesser extent. This could be however a reflection of the challenges of balancing economic and ethical benefit and a shift towards the ideal corporate social responsibility: a win-win situation that benefits both parties involved.  An example of this thinking is found in E.ON’s reporting:

“In our 2006 report we described how our emphasis on stakeholder dialogue enables us to create win-win situations for our company and local communities.”

This is a delicate balance and as the differences in the reporting convey, a difficult task. DaimlerChrysler sums it up best in their report:

“Striving for future viability demands weighing every decision against social, ecological and economic priorities. With a little luck, a win win situation arises in which all players benefit. But sometimes one group is compelled to take a loss, enter a compromise, come away a loser.”

5.6 The Effects of Culture on CSR Eeporting in Germany and the US

The primary difference in the communication of ethical aspects of CSR is the rooted in the fundamental debate in CSR: to what extent should a business contribute to a society? Though both


E.ON, p 37

DaimlerChrysler, p 20

countries demonstrate through their reporting activities that businesses now consider contributions to society as a given, their attitudes and motivations towards social responsibility differ. The US aims to be a leader and justifies its activities often with an economic benefit. German companies don’t mention leadership as much, but seem to be more concerned with communicating their acknowledgement of their role in and obligation to society.

              A broad interpretation and application of Hofstede’s cultural dimensions is useful to understand this difference. In US companies the focus of the ethical activity consistently relates back to the organization itself, which could be a reflection of the highly individualist nature of US society, where the individual is expected to take care of himself. Often the focus in the reports is on how the company will benefit through the implemented citizenship programs. While communicating to stakeholder how they take care of society, the US companies generally report on how it takes care of itself. However, it is less clear when examining German companies how the individualism dimension relates. German companies focused more on their obligation to the community; this could reflect a more collective society when compared to the US only.  Though both the US and Germany are more individualistic when compared to Scandinavian countries for example, the difference in individuality as it relates to CSR activities in this case reveals a gap between the US and Germany, which is reflected in the reporting of ethical aspects of CSR.

           In addition, the leadership theme of US companies fits with Hofstede’s masculinity dimension. A leader is “ a person or thing that is the most successful or advanced in a particular area.” A masculine society values “achievement, heroism, assertiveness, and material success.” The discovery of the leadership theme could be interpreted as a reflection of the masculine dimension within the US. While there is a notable difference between the US and Germany in terms of leadership intentions, the German companies still tie in success to the ethical aspects of CSR which can be interpreted as a sign a German society’s masculine values. Germany and the US are both similarly ranked on Hofstede’s value dimension of masculinity.


Hofstede (1985), p 348

           The cultural difference in the reporting of business ethics themselves is consistent with Palazzo framework of comparing business ethics between the US and Germany. As noted in previous sections, American companies tend to be more explicit in their statement of ethics, by implementing a code of ethics for example. By contrast, German companies are more implicit in their reporting of ethics. They prefer to use an implied ethical framework through codes of conduct or governance as a guide for everyday actions. In addition, the reporting of ethical violations is not practiced in the German companies; this serves as example of differences in cultures are also based on a given society’s history and background, thus demonstrating how each society and culture is affected by their previous history.

           As an examination of these reports reflect, the cultural difference between the reporting of ethical aspects of CSR lies in the differences between Germany and the US in their interpretation of ethics. Americans approach ethics with a utilitarian or consequentialist position; their actions are communicated as ethical because they cause more good than harm for the majority of people. In contrast, the German implementation of ethics takes a deontological approach, meaning their activities reflect a consideration of their duty or obligation. Both approaches are reflected in the analysis of the reports. The German companies frequently communicate their obligation to society while the US focuses on communicating the results of their ethical activities, as evidenced by both the abundance of philanthropic activity and the desire to be a leader and train others in ethical practices.

          Thus cultural values with the focus on the success of the individual, which is the company itself in the case of CSR, shape reports and communicate a primary focus on results and benefits for the company. A less individualistic value in a culture produces a report more focused on a goal of equal distribution of benefits for stakeholders. Moreover, the reporting of the ethical dimension of CSR is affected by the two cultures conflicting understanding of ethics: a deontological versus consequentialist interpretation of ethics.

5.7 Analysis Limitations

      One of the limitations to this study involves the role of industry. For example, in the US data, the top three companies are oil companies. As the oil companies’ reports reflect, they have to consider a wide range of stakeholders. These include not only shareholders, suppliers, and employees, but also suppliers, private and state run security forces located in developing nations, governments in unstable societies and unfavorable reputations. Furthermore, because of nature of their industry, oil extraction and industrial production for worldwide consumption, environmental issues and human rights play a significant role in their reporting of CSR. Thus, an oil company’s obligations are not the same as a bank’s obligations or a retail company, such as Wal-Mart. In addition, the amount of money a company earns could affect the extent to which a company allocates financial resources to corporate social responsibility and thus affect the type of ethical aspects of CSR being reported.

      Furthermore, this study compares two Western, industrialized countries. The results from a study between top Asian companies and the US or Europe, would add more insight on the differing role of ethics within a CSR context.

     Therefore, the results of this comparison study must be considered in as exploratory. If the goal in future research regarding the communication of the ethical components of CSR is to reach a common framework of reporting, future research is needed to examine industry differences between cultures and CSR reporting in smaller companies, all of which is beyond the scope of this study.

6 Conclusion

    The reporting of ethical aspects of CSR in both countries is communicated through annual reports to company stakeholders. These stakeholders are defined by the company but can include shareholders, employees, communities, suppliers and possibly NGOs.  These voluntary reports share some similar features across both US and German companies. In both the US and Germany, heavy emphasis is placed on stakeholder dialogue and engagement, especially within the community in which they operate. Both communicate their acknowledgement that business has an ethical obligation to society. However, it is the context in which they communicate their ethical responsibility that differs. The US

companies appear to see their ethical responsibility as a means to increase profit and confirm their status as a leader among other companies, thus reflecting the individualist character of American culture. The German companies generally acknowledge their responsibility towards society, however, it is within the context of equal benefits and striving to meet stakeholder expectations and gain their support;  this is possibly a reflection of a less individualistic culture.

             In addition, US companies tend to be more utilitarian in their approach to discussing ethical aspects of CSR, reflecting the American consequentialist interpretation of ethics. In the reports they describe explicit codes of ethics and present numerous examples of strategic philanthropic activity. By contrast the German companies take a more implicit, deontological understanding of ethical behavior by referring to innate ethical behavior embedded within the codes of conduct throughout their organization.

            In the reporting of the ethical aspects of CSR, there is a blurring between the ethical aspects and the economic aspects of CSR in both countries. This can be interpreted as reflection of companies’ push towards an ideal corporate social responsibility: a win-win situation where all parties involved benefit. The challenge to this ideal situation, as the differences in CSR reporting demonstrate, is in the balancing of economic and ethical priorities. This challenge has implications for global business strategy. For example, the decision to not invest in a profitable project because of unfair labor conditions within a given country or because the project will cause great harm to the environment in the local society has to be weighed against the loss of capital. The shareholders, who are also a stakeholder to be considered in the stakeholder dialogue, stand to lose financial value if the projects are not implemented. Since these companies operate in a global, neo-liberal economy, they must ascribe some form of monetary value to these concepts of ethical responsibility. Ascribing value to intangible concepts like social responsibility is the root of this fundamental challenge. Thus the reports serve as a means to ascribe value to the socially responsible activities in order to inform all stakeholders involved so they can participate in the dialogue towards a more sustainable future.

               Though the debate remains in research literature about the extent to which companies should or should not participate within society, it is clear from reports from both countries that CSR and its ethical aspects, such as philanthropy, stakeholder engagement, and citizenship initiatives, are considered necessary for today’s business success. Societies in different countries are demanding an ethical responsibility from businesses. Despite the differences in responding to these demands, businesses in both societies recognize that without the integrations of ethics into business strategies and the engagement and, ideally, the support of stakeholders through dialogue and reporting, business success will suffer.

7. Perspectives – Finding value in CSR reporting

On May 28, 2008, protesters gathered outside the Chevron’s annual shareholders meeting in San Franisco, CA to protest Chevron’s alleged human rights and environmental abuses. They accuse Chevron of numerous examples of disregard for the environment and community in which they operate around the globe. In Ecuador they are accused of failing to clean up toxic wastewater sights in the Amazon that have sickened locals. In Nigeria, they are accused of hiring Nigerian security forces who opened fire on protestors, killing two. Chevron’s investment in an oil pipeline in Burma, whose government has an abysmal human rights record, also raises concern for human rights groups.

         The first two cases are currently in trial and awaiting a verdict. Chevron contends they are vilified in the media and are a victim of incomplete information. With regard to Myanmar, Chevron stated that their possible influence over the ruling military government is minimal. It addition, they state that they had recently just given $2 million to disaster relief efforts to aid victims of the recent cyclone, which could find its way into next year’s CSR report if this study’s results serve as a guide.

             CSR reports are not binding contracts of behavior. They are produced by the companies themselves in accordance with adherence to voluntary guidelines. Words without value attached to them, such as trust, remain simply an empty statement. Therefore, given continuing revelations of patterns of unethical activity by a company, how does one weigh the value of the CSR report against severe allegations of abuse?

           Furthermore, the companies covered in this study were all multinational companies with a large amount of financial capital. If they are expected to give back to society, in part due to their large profit intake and global operating locations, then what are the expectations of small-to-medium sized (SME) companies to society? Given that SMEs don’t have as much capital and possibly as much influence in the global market, are they then equally responsible to society? Are their CSR reports considered as valuable as the multinational companies?

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Those not exhaustive, these are all questions surrounding the role of CSR reports. Regardless of the differences in reporting, the value of the reports is at stake in any society when a company’s actual ethical behavioral conflicts with their communicated ethical behavior .

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US Company Overview and CSR Report Title

Locations for access to US Corporate Social Responsibility Reports:


Bank of America





Ford Motor

General Electric

General Motors


Locations for access to German Corporate Social Responsibility Reports:




Deutsche Bank

Deutsche Post

Deutsche Telekom