INTRODUCTION
As the EU is moving strongly towards the achievement of the Sustainable Development Goals (SDGs) and Europe’s climate neutrality by 2050, corporate social responsibility (CSR) becomes a necessity. In today’s highly challenging business global environment, management strategic orientation on the concept of CSR becomes even more important, that the concept is strategically and operationally aligned with the social economic, ethical and moral values of the broader community[1]. As stakeholders become more and more exposed to the effects of the global online market in most industries on a daily basis, individuals' awareness of social issues is no longer local or national but global. Such a global level of awareness continually increases pressure on companies to strategically effectively implement and communicate social responsibility to all stakeholders[2]. When export organizations move beyond their domestic market, they have to comply with internationally required safety, quality, and CSR standards[3]. Moreover, they face the issue of liability of foreignness[4], as of their non-native status in the foreign market, thus CSR can help them overcome this obstacle[5]. Besides this, their CSR activities on foreign markets, can also be motivated by the fact that CSR can help create or reinforce corporate image[6], gain higher visibility, mitigate risk, have greater availability of funds, optimise ideas and increase innovative solutions for stakeholders[7]. Differentiation of products and services based on CSR, as an important element of the organizational strategy, is becoming an increasingly important factor in achieving strategic goals in foreign markets. It implies that a unique position in the market can be achieved by having a reputation of the responsible organization, offering responsible products or services, and by consideration of multiple stakeholders in organizational value chain[8]. It is necessary to ensure that the entire supply chain of the company functions in accordance with social and environmental standards[9]. Still, the question is how to design and coordinate CSR activities and multiple shareholder relations, as well as to priorities them[10]. In that existing literature, there is a scarcity of research that investigates differentiation based on CSR and how it is linked with CSR activities and communication on foreign markets. In that sense, this article aims to analyse the relation between CSR strategy, activities and communication of export organizations in foreign markets. We test for the effects of inclusion of CSR, as a crucial part of organizational strategy, on CSR activities and communication when organizations operate in host markets. The theoretical part of the article is supplemented with empirical research on a sample of 78 export organizations from Croatia. This is followed by a discussion of the main research results and implications of the conducted research.
IMPORTANCE OF CORPORATE SOCIAL RESPONSIBILITY ON FOREIGN MARKETS
Globalization and international interconnectedness of foreign markets have enabled profit and non-profit organizations, perceived in the global community as socially responsible entities, among other things, to further strengthen their competitive advantage by successfully differentiating through the concept of CSR[11]. As the range of socially responsible activities will expand daily, the management of export companies must find methods to create coherence in the strategic and operational part of CSR because it is a necessary postulate for maintaining competitive advantage in the global market and social sustainability[12]. To successfully differentiate in domestic or export markets, it is necessary to ensure that the entire supply chain of the company, but also the sales and marketing activities in the markets, function in accordance with social and environmental standards. In that way stakeholders, through communication with the company, successfully differentiate that kind of organization from domestic or foreign competition[13].
CSR activities are viewed as a tool that creates a positive impact of business activities on society and the environment, which in turn leads to a better reputation and higher profitability rates in different markets[14]. The concept of CSR is a perfect tool for export companies to transfer a positive reputation to foreign markets[15]. CSR creates a more positive reputation with internal and external stakeholders, ensures higher profitability rates, and attracts sophisticated and socially responsible investors[16]. As this is a process that can take several years, it is very difficult for competing companies to mimic the process of CSR differentiation efficiently and in a short time[17].
Differentiation based on social responsibility is also suitable for smaller companies because it does not require, as opposed to differentiation based on innovation or quality, a strong innovation structure and associated high costs[18]. The benefits of differentiation based on CSR, emerge as a result of consumers’ willingness to pay more for products and services marketed by socially responsible organizations[19].
The most difficult task of management is to determine the financially justified limit at which investing in CSR achieves the highest financial returns because misjudging that limit will create additional costs which can steer the entity toward the abyss, both reputational and financial[20]. The greatest harm to export companies can occur if the concept of CSR is approached philanthropically or spontaneously. Only with a strategic approach based on new digital technologies does the company's management control the environmental, social, and economic line of business, regardless of whether it is a domestic or foreign market[21].
CORPORATE SOCIAL RESPONSIBILTY STRATEGY ROLE IN ACTIVITIES AND COMMUNICATION IN FOREIGN MARKETS
CSR strategy presents an agenda for managing organizational impacts on society and the environment[10], creating social and economic value, with the inseparability of these two values. It presents activities and policies unique to organizational context, and that take into consideration the needs of stakeholders and the triple bottom line of economic, social, and environmental performance[22-23].
A successful differentiation in the eyes of stakeholders can be achieved when CSR strategy becomes an integral part of the company's business strategy. This strategy of differentiation through the concept of CSR is more often a logical choice because even smaller strategic investments in certain CSR activities can generate the greatest benefits through strengthening consumer loyalty who are willing to pay even higher margins to support such management policy[24]. For such loyalty and connection between the organization, consumers, and other stakeholders, it is important that management, in addition to conducting socially responsible activities, knows how to communicate the same activities transparently using primarily digital media, but also traditional media on certain markets, so that stakeholders can successfully identify with the organization and its ideas[25].
A prerequisite for successful differentiation based on CSR activities is the awareness of internal and external stakeholders about the implementation of the concept of social responsibility in business processes. In this context, the choice of communication channels for reporting on CSR activities and the content of the message to stakeholders are key factors for successful and sustainable differentiation[26]. To succeed in communicating CSR in domestic and foreign markets, management is required to identify target stakeholders and their interests. Furthermore, management has to develop the most effective communication channels through which dialogue with stakeholders allows management to understand which community problems are most important and sometimes even how to solve them[27]. The growing power of global stakeholders and the emergence of digital communication have created an environment in which new strategic models of approaching the concept of CSR are continuously being developed[28]. Just as profit and non-profit organizations have internationalized their operations over the past decade, stakeholders are becoming global players creating perceptions of organizations by following digital international media and social networks and increasingly rewarding socially responsible companies around the world by buying their products through online markets[29].
METHODOLOGY OF RESEARCH
STUDY DESIGN AND MEASUREMENT ITEMS
To test for the relation among CSR strategy, activities and communication of export organizations on a foreign market, empirical research was designed and conducted. Two main research propositions (RP) were tested for:
RP1: Inclusion of CSR in organizational strategy has a positive effect on CSR activities in foreign markets.
RP2: Inclusion of CSR in organizational strategy has a positive effect on CSR communication in foreign markets.
A survey method and an anonymous questionnaire as a research instrument were used for data gathering.
To assess the level of inclusion of CSR in organizational strategy, a construct measuring the representation of CSR in the company's strategy was formed. This construct is based on the main dimensions of CSR as defined by ISO 260000[30], as well as definitions of organizational strategy and its characteristics as defined by Galbreath,[31] and Tipurić[32]. By using the Likert 5-point scale (1-strongly disagree, 5- strongly agree), we asked respondents from each participating organization to evaluate their level of agreement with the provided statements.
CSR activities in foreign markets were analysed through seven dimensions defined by ISO 26000: environment, human rights, labour practices, organization governance, fair operation practices, consumer issues problems and contribution to the community and society[30]. By using the Likert 5-point scale (1 – not being implemented at all, 5 - continuously implemented), we asked respondents to rate the presence of each activity in their organization.
Communication of CSR in foreign markets was measured by the intensity of use and degree of development of communication of the export company with groups of stakeholders in foreign markets. Intensity and degree of development refer to:
• use of communication channels - four main channels of CSR communication analysed were: social responsibility reports, web pages, social networks, and advertising[33]
• development of communication assessed through the implementation of the principles of communication: 1) balance: 2) comparability, 3) accuracy; 4) timeliness; 5) clarity, and (6) reliability[34].
Each participant was asked to assess the statements referring to the level of development of each communication channel and the principles of communication by using the Likert 5-point scale (1 – not being implemented at all, 5 - continuously implemented).
SAMPLE CHARACTERISTICS
Empirical research was sent to medium and large export companies in Croatia that had an income from their export activities at a minimum of 25 % of total revenue. Sampling was done based on the data provided by the Croatian Exporters Association. Responses were obtained from 78 of the 220 companies that met the criteria. The study was conducted over a period of three weeks. In companies, the survey was answered by the owners or management of the company.
Sample characteristics are provided in the following table.
RESEARCH RESULTS
DESCRIPTIVE STATISTICS
Results of descriptive statistics indicate respondents give on average high grades for different variables oriented towards measuring representation of CSR within the organizational strategy (Table 2). The highest average value is indicated for CSR being incorporated within company strategy as one of key strategy elements (CSR_STRATEG_1) and CSR being represented in company mission which is the key element of company strategy (CSR_STRATEG_2).
With regard to CSR activities, results reveal export organizations on foreign markets implement different CSR activities significantly (Table 3). Mostly implemented are activities regarding labour practices (average 4,60), human rights (average 4,54), and environment (average 4,51).
1 – not being implemented at all, 5 - continuously implemented
1 - not being implemented at all, 5 - continuously implemented
Table 4 presents the CSR communication channels and principles of communication. CSR reports (average 3,81) together with web pages (average 3,68) as communication channels are mostly used. As to communication principles defined by Global Reporting Initiative (GRI) guidelines, results reveal companies in their communication are guided by principles of balance, comparability, accuracy, timeliness; clarity and reliability, as average marks for all principles are high (ranging from 3,49 to 3,86).
For further analysis sum values of construct CSR representation in organizational strategy, CSR activities, and CSR communication, have been developed and presented in table 5. Internal consistency of items within the scales, indicated their reliability, as the values of Cronbach’s alpha are higher than 0,7 as recommended by Kim and Feldt[35].
| N | Average | St. Dev. | Cronbach’s Alpha | |
|---|---|---|---|---|
| CSR_STRAT | 78 | 3,92 | 0,66 | 0,873 |
| CSR_ACTIVITY | 78 | 4,29 | 0,63 | 0,844 |
| CSR_COMMUNICATION | 78 | 3,55 | 0,68 | 0,841 |
Multicollinearity has been analysed using correlation analysis and by calculating VIF coefficients. Since none of the correlation coefficients among independent variables was lower than 0,85, and since VIF coefficients were lower than the threshold value of 5, it was concluded that multicollinearity is not present in the dataset.
TESTING OF RESEARCH PROPOSITIONS
Our first research proposition analyses if the inclusion of CSR in organizational strategy has a positive effect on CSR activities in foreign markets. To test this, we used a regression model.
Table 6 presents a model summary of a regression model with CSR activities as a dependent variable. The adjusted coefficient of determination indicates that the model explains a 63,2 % variance in dependent variable CSR activities. The Durbin-Watson coefficient is 2,007, which indicates that there is no problem with autocorrelation in the model.
| R | R Square | Adjusted R Square | Std. Error of the Estimate | Durbin-Watson |
|---|---|---|---|---|
| 0,816 | 0,666 | 0,632 | 0,380 | 2,007 |
*** statistically significant with 1 % probability, ** statistically significant with 5 % probability
As ANOVA test has been statistically significant at the probability level of 1 %, (F (7, 70) = 19,924) leading to the conclusion that at least one independent variable has a statistically significant impact on dependent variable CSR communication, we further tested each particular variable related to the inclusion of CSR in organizational strategy (as an independent variable) and its effect on CSR communication (dependent variable). Table 7 presents the coefficients of this regression model.
Results indicate that variables CSR_ STRAT_1 (CSR is incorporated within company strategy as one of the key strategy elements), CSR_STRAT_3 (CSR is represented within the analysis of internal and external influences which is the key element of company strategy), CSR_STRAT_4 (CSR is represented within the market analysis which is the key element of company strategy) and CSR_STRAT_7 (CSR is planned as an activity which contributes to achieving competitive advantage) have a statistically significant influence on CSR activities of export organizations on foreign markets.
Our second research proposition analyzes if inclusion of CSR in organizational strategy has a positive effect on CSR communication in foreign markets.
Table 8 represents a regression model summary with CSR communication as the dependent variable. The adjusted coefficient of determination indicates that the model explains 48,3 % variance in the dependent variable CSR communication. The Durbin-Watson coefficient is 1,688, which indicates that there is no problem for autocorrelation in the model.
| R | R Square | Adjusted R Square | Std. Error of the Estimate | Durbin-Watson |
|---|---|---|---|---|
| 0,729 | 0,531 | 0,483 | 0,487 | 1,688 |
As ANOVA test has been statistically significant at the probability level of 1 %, (F (7, 69) = 11,161) leading to the conclusion that at least one independent variable has a statistically significant impact on dependent variable CSR communication, we further tested each particular variable related to the inclusion of CSR in organizational strategy (as an independent variable) and its effect on CSR communication (dependent variable). Table 9 presents the coefficients of this regression model.
** statistically significant with 5 % probability, * statistically significant with 10 % probability
Results indicate that variables CSR_STRAT_5 (CSR is represented within the consumer analysis, as primary stakeholders, which is the key element of company strategy) and CSR_STRAT_7 (CSR is planned as an activity which contributes to achieving competitive advantage) have a statistically significant influence on CSR communication of export organizations on export markets.
DISCUSSION AND CONCLUSION
It is clear that modern society needs to change, how to bridge the sustainability gap through rewiring the economy becomes the most important question for modern leaders. The EU’s Green Deal, a 1 trillion-euro investment plan to reduce greenhouse gas emissions by 55 % in 2030 (relative to 1990 levels), has been recognized as the first comprehensive plan to achieve climate neutrality at a continental scale. As the green economy becomes a new paradigm in the EU, the struggle for stakeholder support in all industries is growing. As of the growing importance of the concept of CSR, the emergent complexity of the challenges facing the global community, but also a growing number of stakeholders, it is clear that companies operating internationally will need more financial and non-financial resources for the concept of CSR to survive on the global stage and maintain targeted profitability[24]. In addition to strategic investments in the concept of CSR, the key to entry and sustainable growth in foreign markets through differentiation based on CSR can be achieved only through dialogue and open communication with internal and external stakeholders. A one-way communication towards stakeholders can be counterproductive and jeopardize the reputation and consequently the entire investment[36].
This article was oriented towards analysis of the relation between CSR strategy, activities, and communication of export organizations. We tested for the effects of inclusion of CSR, as a crucial part of organizational strategy, on CSR activities and communication of 78 medium-sized and large export organizations from Croatia operating in foreign markets. The results of the empirical research point towards the importance and positive influence of inclusion of CSR in organizational strategy, on CSR activities and communication channels and principles in foreign markets. More specifically, when CSR is incorporated within a company strategy, when it is represented within the analysis of internal and external influences and within the market analysis but also when CSR is planned as an activity that contributes to achieving competitive advantage this can have a statistically significant influence on CSR activities of export organizations on foreign markets. Also, results show, that regarding communication channels and principles, when CSR is represented within the consumer analysis, and when CSR is planned as an activity that contributes to achieving competitive advantage this has a statistically significant influence on CSR communication of export organizations on foreign markets.
However, results have to be seen in the light of research limitations, primarily relating to sample size and its characteristics, such as the inclusion of only medium and large-sized organizations from Croatia. Furthermore, many mediating and moderating variables can affect the CSR behaviour of export organizations on the foreign markets which were not included in this research. For instance, it would be interesting to see if specifics of foreign market itself, such as its regulatory framework can have a higher effect on the level and type of CSR activities and communication on a foreign market. Also, to further understand the behaviour of export organisations in terms of their CSR, it would be interesting to compare its CSR behaviour on the both domestic and export markets.
Despite these limitations, it can be concluded that this article provided some additional insight into the relationship between the inclusion of CSR in organizational strategy on CSR activities and communication channels and principles in foreign markets. And that research results can be seen as a starting point for further research on this subject. It has to be emphasized that the growing focus of consumers on the concept of CSR can be considered a global phenomenon that in the upcoming years will be even more important, and consequently continue to be an increasingly important topic for top management of companies operating globally, regardless of industry or domicile market[37-38]. Therefore, additional research is necessary. Not only financial benefits but also new market opportunities, in both domestic and foreign markets, long - term business profitability and continued stability are expected for companies that will know how to incorporate CSR in their organizational strategy and take into consideration the needs of their internal and external stakeholders[29], activities and communication.