Ryan Quinn and Dr. David A. Whetten, Statistics

In the popular press of today’s business world, socially responsible business is a hot topic. Periodicals, books, mutual funds, associations, and countless other media, groups, and people tout socially responsible business as the “right” thing for forward-looking companies to do. Underlying all of the claims of benefits that come from social responsibility is the assumption that becoming a socially responsible company is a simple task that any firm can accomplish. The purpose of this study was to question that assumption. It may (or may not) be a simple task to acquire a socially responsible image, but to become a truly socially responsible company — where social responsibility is part of the firm’s identity — is much more difficult. In fact, our null hypothesis in this study was that all firms that have a hybrid identity (where doing well economically and doing good socially are both integral to “who we are” as a company) began as such. We would disprove this hypothesis if we could find even one company that was able to graft social responsibility into its identity after reaching maturity as an organization.

The first problem we faced in conducting this research was determining which companies to study. An organization’s identity is that about it which is (1) core, (2) distinctive, and (3) enduring. We assumed that all businesses seek to maximize (or at least make) a profit on what they do. Our problem was that of finding businesses where social responsibility was core, distinctive, and enduring to them.

In order to determine companies had social responsibility as a characteristic that was distinctive to them, we began to study a number of socially responsible rating systems to see how companies were rated, and which ones performed the best. After studying a number of systems, we decided that the best system for our purposes was the SCREEN system conducted by the Council on Economic Priorities. This system uses quantitative scales to grade the companies it rates from A to F on the following factors: environment, women’s advancement, minority advancement, charitable giving, community outreach, family benefits, workplace, and disclosure. We decided that any company that rates highly enough on each of these factors to receive a cumulative grade point average of 3.5 or higher was distinctively socially responsible. In this initial selection phase, there were 30 firms that met our criteria.

The next phase in selecting the companies was finding out how core and enduring these values are within the firms. We tried to use past records to determine how enduring these socially responsible values are, but there was not enough data to ascertain. We knew that the companies had to be mature companies, though, so that we could see if they had been “bom” with these values, or if they were grafted in after maturity. We used the S&P 500 as our cutoff for determining maturity. We felt that if a company was in the S&P 500, then it must be a large organization both in terms of personnel and revenue, it must be public (an important question is whether the values were enduring enough to survive going public), and it would be old enough to have lived through more than one CEO succession. This was true in all cases. After this final cutoff, we had 21 companies in our sample to study.

The next step in our study was to collect qualitative data that would help us to (1) determine how core and enduring social responsibility really is to these companies, and (2) determine the origins of the companies’ socially responsible values.

We used three methods for gathering information on these companies. They were telephone interviews, company documents and propaganda, and library research. These methods provided us with a wealth of information on the companies. Five companies refused to participate in our study. We are still trying to obtain information on their history and values through other means.

Of the sixteen companies that did participate, we were able to get good qualitative data that illustrated how core and enduring the socially responsible values were for fifteen companies. We have not yet been able to get enough historical data to determine the origin of Colgate Palmolive’s values.

On a spectrum between image and identity, if a company’s values are solely distinctive, but not core and enduring, then social responsibility is an image for that particular company. If the company values meet all three criteria, those values reflect the company’s identity. Each of the companies, then were rated according to how core and enduring these values are, and placed on that spectrum. JC Penney’s, Johnson & Johnson, and Merck & Co. are rated the highest on this spectrum. Campbell’s Soup was rated the lowest. They see social responsibility as a good thing, but more as a tool necessary to perform well in today’s economy rather than as a mission or core value.

Campbell’s Soup was the only company whose values did not begin before the company reached maturity. This does not refute the hypothesis that socially responsible identities begin before a company reaches maturity, though, because social responsibility is more of an image for Campbell than an identity.

Although not all of the companies’ value systems began with the founders, they did begin before the company reached maturity, and usually began because of the direct influence of one or a few specific corporate leaders.

The results of this study have important implications for both practitioners and those who study socially responsible business. It means that if we want social responsibility to be part of what a company is, and what it stands for, it takes years of investment to make that happen. Each employee in the organization from the top to the bottom must believe that these values are predominant in how the company is run, and this belief must be perpetuated through all the institutions of the company through each generation of employees until it permeates the system. This cannot be done overnight. We have to encourage hard work and patience if we want companies in our economy to espouse and champion these values.