A Case Study At The HSBC

A content Study At The HSBCChapter 1Literature Review1.1 Overview of integrated cordial ResponsibilityThe notion that task has du tie downs to c solelyer is fuddledly wholesome-established, despite the accompaniment that in the past in that location has been a revolution in the authority people view the relationship between argumentation and society. Numerous researchers call down that companies which indulge in merged kindly function obtain consumers imperious product and brand evaluations, brand choice, brand recommendations, honourable attitude to firm, good doubling of the firm, purchase intention and compensate enjoy a documentation price.Spurred at least in part by more than(prenominal) evidences, to a greater extent companies than ever before argon backing CSR initiatives such as corporeal philanthropy, endeavour- link marketing, minority support programs, and favorablely answerable employment and manufacturing practices with real pecuniary muscle . Not surprisingly, this trend is as well as reflected in the pervasive belief among commercial enterprise leaders that CSR is an economic strident in todays national as salutary as ball- regulate marketplace.However despite the increasing importance of CSR, on that point is little research available intimately CSRs wallop on consumers. jibe to Yoon (2003), it is not clear when and how CSR activities influence consumer evaluations. Recent researchers gravel suggested that a CSR action mechanism might backfire on the companion if the consumers deliver become rummy and infer that the companys true motive for the CSR activity is only to improve its fancy to sell more products with discover trying to act for the sake of consumers1.1.1 Defining collective impinge onionate Responsibilityharmonize to Kotler (1991), integrated societal responsibility is nigh doing responsibility in a way that maintains or improves both the nodes and societys well creation Fombrun a nd Gordberg (2000)s point of view is that, somatic social Responsibility is something that no sane chairman should be without.On the other hand, Petkus and Woodruff (1992) mean CSR includes both avoiding harm and doing good. bodied social responsibility is viewed as a companys commitment to minimize or eliminate any harmful effectuate and maximizing its long run beneficial electric shock on society.Corporate social responsibility activities include numerous factors namely meeting customer expectations, demonstrating commitment to environmental responsibility, improved environmental surgical procedure, staying ahead of the legislation, and increased employee motivation.Mohr, Webb, and Harris (2001, 47) limit CSR as a companys commitment to minimizing or eliminating any harmful do and maximizing its long-run beneficial impact on society.Though, Angelidis and Ibrahim (1993) qualify corporal social responsibility as corporate social actions whose purpose is to receive socia l needs, Lerner and Fryxell (1988) suggest that CSR defines the extent to which organisational outcomes ar consistent with social values and expectations.While some view CSR as an agreement, others, namely Enderle Tavis (1998) define corporate social responsibility as the policy and practice of a corporations social involvement over and beyond its legal obligations for the benefit of the society at large.1.1.2 Dimensions of Social ResponsibilityThe dimension of social responsibility was propounded by Carroll (1979). It was proposed that organisations pee-pee to have 4 pillars that must be fulfilled to be good corporate citizens. They atomic number 18Economic Dimension. Economic responsibility is to be profitable for principals, by delivering a good quality product, at a fair price, is due to customers.Legal Dimension. Legal duties think of complying with the law and contend by the rules of the game.Ethical Dimension. Ethical duties overcome the limitations of legal duti es. They entail being moral, doing what is compensate, just, and fair respecting peoples moral rights and avoiding harm or social injury as well as preventing harm crusaded by others (Smith and Quelch, 1993).Philanthropic Dimension. Interest in doing good for society, regardless of its impact on the bottom line is what is called philanthropic CSR that is giving back time and m ane and only(a)y in the forms of free service, voluntary association and voluntary.1.2 Evolution of the CSR concept.Even relatively contemporary, a speculation of CSR piece of ass be divided into four eras ready on several abstract shifts (Lee, 2008). The low dominant stalk emerged during 1950s and 1960s concentrating on morals and social obligation of crease. A pivotal study by Bowen (1953) contended that CSR is an obligation of businessmen to act in line with the objective lenss and values of society. CSR was posited as a complementary and corrective measure for some social failures in the la issez faire economy. Friedman on the other hand was bear on with the insufficient skills of corporate buss to net social problems and potential cost from uncertain outcomes that would reduce the maximisation of stockholder wealth a true responsibility of business. Such an intellectual deadlock contri besidesed to the shift from the emphasis on macro-social ca economic consumption of CSR to an organizational- direct analysis of CSRs effect on financial performance.CSR in the second period was central around enlightened self- vex in the 1970s. A conceptual break by by Wallich and McGowan (1970) correspond reconciliation between the social and economic interests of corporations. The authors argued that CSR supported the long-term interest of sh beholders by strengthening the wellbeing of the society, which provided a crucial support body structure and customer base for business operations. Most studies in this era center on the content and imposeation cognitive process of C SR to avoid conflict with business interests (Ackerman, 1973 Fitch, 1976 Murray, 1976). A major caveat in this conceptual reconciliation was the insufficiency of a specific mechanism to identify a causal tie in between social responsibility and financial performance (Weick, 1976). In the 1980s, the tie between the economic and social goals of business became tighter in the corporate social performance sample. The dominant theme represented the thirdgeneration of CSR.The multi-dimensional mildewling of corporate social performance was proposed in a pivotal study by Carroll (1979). This model suggested the integration of economic and social objectives in a total CSR framework, featuring economic, legal, honourable and discretionary aspects. The model was modified by Wartick and Cochran (1985) to include principles, processes and policies. Wood (1991) advertize formulated a more pragmatic model incorporating related theories, such as organizational institutionalism and stakehold er management theory. The limitation of the CSP model was the lack of objective and wayal measurement to be able to comp atomic number 18 the social performance of different companies (Wood and Jones, 1995).An aim to generate business return from CSR is most turgid in the latest development of CSR through strategic management. In this perspective, the stakeholder model has become central to the new CSR paradigm (Jones, 1995). Based on the stakeholder theory (Freeman, 1984), Clarkson (1995) ameliorated the measurement problem in CSR through stakeholder identification, separation of stakeholder and social issues, followed by appropriate take of analysis. CSR becomes strategic when integrated into a companys core business competencies by serving as a filter through which strategic decisions argon evaluated for their impact on the firms various stakeholders (Werther and Chandler, 2006). Strategic CSR then matches interior core competencies with the external opportunities to compleme nt corporate mission and vision related to social responsibility (Du et al., 2007 Werther and Chandler, 2006).1.3 CSR and StakeholdersAccording to Smith (2003), stakeholder theory is based on the principle that companies need to consider the effects of their actions on all constituencies (e.g. sh arholders, customers, employees, suppliers, the environment, and the community), even if profitability is reduced. On the contrary, sh areholder theory argues that the only responsibility of a company is to (legally) receive profits for its shareholders.Mitchell (2001) argues that the shareholder approach increasingly dominates American companies. Furthermore, it is often interpreted as having one prefatory goal-maximizing stock prices. This, in turn, leads to a short-term perspective because growing proportions of Stockholders buy and sell stocks based on short-term information. Mitchell goes on to argue that companies are obligated to make profits, entirely there is nothing in the lega l outline that requires maximization of stock prices or that restricts the time frame to the short term. Nonetheless, a manager who does not produce sufficient earnings for shareholders risks his/her job and puts the company at risk of a takeover (Martin 2002).Martin (2002) barely argues that when responsibilities to the community are seen as being probably to come at the shareholders expense, managers usually side with shareholders. He suggests that most socially liable corporate behaviors are done specifically to enhance shareholder value. These are generally activities undertaken to comply with laws, regulations, or norms. They entail simply meeting the baseline of societys expectations companies that do not meet basic expectations are believably to lose financially. On the other hand, there are many socially answerable actions taken by companies because managers gestate they are the right things to do. Because these actions are outside the norms and may lead to financial losses, they are considered risky.1.4 Social responsibility, melodic phrase Ethics and Corporate brass instrument.1.4.1 Social Responsibility and Business EthicsToday, ethics has become more and more important with global business expansion. This is so, because of a raise in honourable and social responsibility concerns. in that location exists, however, jibe to Czinkota and Ronkainen (1998), a wide divergence in the level of importance attached to these devil issues in different countries.Ethics as defined by Hoffman and Moore (1990) define ethics as what is good and right for people. An individuals perception about whether ethics and social responsibility contribute to organizational effectiveness is possible to be a little antecedent of whether he/she even perceives an honorable problem in a abandoned topographic point1. This is a practical view based on an argument that managers must first recognize that ethics and social responsibility to be imperative to organization al effectiveness before their behaviors will become more estimable and reflect greater social responsibility.Intuitively, ethics and social responsibility should have a controlling impact on the success of an organization, because consumers make respectable judgments that are likely to influence their purchases. Consumers recognize organisations that are responsive to ethical and social factors. Consequently, business should care about ethics because adopting the right conduct helps acquire and preserve good reputation overtime because ultimately, it pay backs to do so.1.4.2 Social Responsibility and Corporate GovernanceThe definition of Corporate Governance differs depending on ones view of the world. Shleifer and Vishny (1997) define Corporate Governance as the ways in which suppliers of finance to corporations assure themselves of getting a return on their investment. fetching a broad perspective on the issues, Gillan and Starks (1998) define Corporate Governance as the syst em of laws, rules, and factors that control operations at a company. disregarding of the finicky definition used, researchers often view Corporate Governance mechanisms as falling into one of 2 throngs those internal to firms and those external to firms. Of course, firms are more than just boards, managers, shareholders, and debt holders.Over the years, Corporate Governance has evolved from the traditional profit-centered model to the social responsibility model. These two models illustrate the fundamental conflict that prevails today in Corporate Governance the Profit-Centered Model and the Social Responsibility Model are mutually exclusive. Each focuses on an opposite half of the corporations reality, even though the economic and social aspects of business are closely interrelated. In short, brass is viewed as a zero sum game. Because the economic role of the firm is fundamental to its survival, profit often drives out social considerations. Because knowledge increases when shared, cooperative partnerships between management and stakeholders can be economically cultivatable. Like all partnerships, stakeholder collaboration is a two-way, working relationship that combines the capabilities of partners for their mutual benefit.According to proper (2000), the wealth-creating role of business arises directly out of integrating stakeholders into a productive whole a corporate community ( rule 1). The corporate community model views the firm as a socioeconomic system in which wealth is created through stakeholder collaboration. This is not done to be socially responsible, but because it is a competitive advantage. Drew et al. (2006) identified five integrated elements that underpin a firms ability to manage risks, engage in effective Corporate Governance, and implement new regulatory changes Culture, Leadership, colligation, Systems, and Structure. Each of these elements relate to the others. For example, organizational culture is shaped by in the lea d practices. Systems support organizational structure and shape its culture. Alignment ensures each element is harmonized with the others so that, for example, explicit cultural norms are reinforced by leadership, and systems reinforce the culture. No one element stands alone. subsequently engaging in an examination process, board members can map organizational challenges against these elements, identify areas in need of improvement, and plan change management programs. tiptop risk management programs and stronger firm governance capabilities result. The elements of CG addressed in Figure 2 could be considered as the core (i.e. management) of Figure 1 (i.e. corporate community model). Combining the models therefore represents the influence of Corporate Governance on CSR or corporate community.Figure 1The basic cause of todays go on conflict between profitability and responsibility is that managers do not appear to understand that these two interests can be united. Stakeholder co llaboration is now the observe to creating economic wealth. In the new perspective, stakeholder collaboration does more than gain resources and semipolitical support it allows joint problem solving to increase the firms storehouse of worth(predicate) knowledge. Future research needs to focus on the stakeholder assessment process and its translation into CSR objectives and policies.Therefore, adopting a process-based management systems approach as the plantation for a CSR management system will provide top management with a holistic view of the business that takes into consideration a single system approach to governance. This approach will provide management with internal control, distinctly identify responsibility and will embed CSR in their organisation. This approach overcomes much of the criticism surrounding many current CSR systems approaches.Figure 2The leadership style is also comprise to play an important role in socially responsible organizations. In this respect, t ransformational leader seems to be more effective, comparability with manager and transactional leader. Thus corporate governance as a critical element for driving excellence in CSR can be a source of competitive advantage for firms in its own right.1.5 Consumer Behavior or Socially Responsible Consumer BehaviorIt has been observed that several personality character variables affect how a consumer reacts to a companys corporate social responsibility activities. bingle trace that has been identified is called socially responsible or socially informed consumer behavior. The socially conscious consumer is a consumer who takes into account the man consequences of his or her hush-hush use of goods and operate or who attempts to use his or her purchasing power, to bring about social change.According to Webster (1975, 188), the socially conscious consumer is a consumer who takes into account the public consequences of his or her private consumption or one who attempts to use his or her purchasing power to bring about social change. Mohr, Webb, and Harris (2001, 47) define this behavior as a person basing his or her acquisition, usage, and disposition of products on a desire to minimize or eliminate any harmful effects and maximize the long-run beneficial impact on society.Over the years, socially responsible consumer behavior has been seen as a lasting personality trait that engrosses the consumers self-concept. Persons, who are high on this trait, would not hesitate to modify their consumption behaviors in a variety of circumstances in order to fight toward the ideal of improving society. Much research has been conducted on this trait. Measurement scales have not only been developed but related demographics and attitudes have also been explored.Roberts (1995) used the method of cluster analysis to segregate a group of socially responsible consumers. He estimated them to constitute 32% of the American population. According to him, when one compares this group to most Americans, the latter is more broadminded and environmentally concerned and has higher levels of perceived consumer effectiveness (perceived ability of individual consumers to influence environmental problems).1.6 The Impact of CSR Activities on Consumer BehaviorConsumers need to be aware of the level of CSR of a company so that this factor can have an impact on their purchase. The fence why, create awareness constitutes one of the major purposes potty cause related marketing which is a subset of CSR. Also, consumers are more likely to respond to a companys social responsibility record when they identify with the company2. Identification is enhanced when consumer perceptions of the companys character are similar to their perceptions of their own character.It is further argued that consumers judge a companys character based more on its CSR than on its business expertise. When consumers personally support the social issues that the company targets (called support for the C SR domain), they are likely to see greater congruence between themselves and the company. In two experiments, CSR was manipulated and its effects on the evaluation of the company were measured. They make up that consumer support for the CSR domain significantly moderated the positive effect of CSR on evaluation.Ross, Stutts, and Patterson (199091), who used a non-probability sample, found that 53 percent of the sample, could recall a cause related advertisement for a product, and Webb and Mohr (1998) found that 79 percent of a sample could describe a specific cause-related marketing campaign after the concept was explained to them. Since CSR is a wide and multifaceted concept, knowledge about the social responsibility activities carried out by companies is relatively low. As a result, it is hard for consumers to acquire and store such information. Lack of awareness, therefore becomes the major inhibitor of customer awareness to CSR.Since 1993, according to reported surveys, firms supporting causes are enjoying a more positive image compared to other firms. Furthermore, the Cone Communications Press Release tell that two thirds or more of the sample express that they are likely to wear round brands or retailers to those participating in cause related marketing.Demand from socially responsible consumers may increase in line with increasing packaging of a firms socially responsible activities research by Sen and Bhattacharya (2001) suggests that consumers sensitive to the particular cause supported by a corporation (such as environmentalism) are more likely to react positively towards that corporation. On the other hand, in interviews with a convenience sample of 225 people, Ross, Stutts, and Patterson (1990-91) found that 49 percent stated that a firms support of a cause had been a primary reason for them to purchase a product, and 54 percent said that they are likely to.Also, most consumers do not understand the ethical dimensions of the products that the y purchase (Auger et al, 2003, p. 299) but experimental studies have shown that once consumers acknowledge a firms socially responsible initiatives their evaluation of that firm (and its products) increases (Brown and Dacin, 1997). Furthermore, it has been established that certain demographics are increasingly likely to make consumption choices based on social grounds (McWilliams and Siegel, 2001, p 121). A national telephone study by Smith and Alcorn (1991) found that 46% of respondents were likely to switch brands to a company that donates to non-profit organizations and 30% sometimes buy products based on the charitable causes that the manufacturer supports.Porter and Kramer (2002) believe that strategic philanthropy1 at its most sophisticated can be responsible for enhancing the reputation of a company by linking the admirable qualities of the supported cause to its corporate identity. Moreover, it is believed that concentrating charitable donations and funding on a popular caus e through a deliberate selection process may have a greater impact than generalized CSR (Porter and Kramer, 2002).Research by McWilliams and Siegel (2001) has found that not all consumers place a high value on the socially responsible actions of a firm the price of competing goods can affect the demand for goods provided by socially responsible corporations. Studies conducted at Marymount University (1999) reported that 75 percent of consumers would avoid shopping at a store if it was know that their goods were produced under poor social conditions.Furthermore, it was found that the corresponding consumers would be involuntary to pay $1 more for a $20 concomitant given that the item was produced under good conditions. These studies show that consumers are willing to pay more for goods produced in a socially responsible manner. Indeed, the University of Maryland (2000) found that approximately 75 percent of consumers would pay an additional $5 at least on a $20 item if it was know n that the item was not manufactured in a sweatshop. However, It has been suggested that income has a significant impact on demand for products from firms with a good reputation for CSR low-income shoppers are seen to be more price sensitive than affluent shoppers. This means that affluent consumers are more willing (and able) to pay a higher price for said products (McWilliams and Siegel, 2001).A survey conducted by Creyer and Ross (1997) measured the attitudes of the parents of elementary school children towards ethical and unethical business behaviour. It was found that respondents expected companies to conduct business in an ethical manner and importantly, respondents stated that they would pay higher prices for products from an ethical company.2.1 An Overview of Corporate Social Responsibility in the coasting SectorThe Mauritian banking industry comprises of 18 banks, of which 5 are local banks, 8 are external own subsidiaries, 1 is a joint venture and 4 are complexifyes of foreign banks.3The banks are certified by the savings bank of Mauritius to carry out banking business locally and internationally.Banks provide several traditional banking facilities and card-based payment services such as credit and debit cards, internet banking and phone banking facilities. Other services such as fund management, custodial services, trusteeship, structured impart, structured disdain finance international portfolio management, private client activities, investment banking, treasury and specialised finance are also offered by banks.The banking sector is now increasingly integrating CSR as a management strategy. External social activities are carried out to benefit the wider social community. The banking sector tops the list with a percentage of 1.2 per cent of profits before taxation. For example, the Mauritius Commercial Bank (MCB), the leading bank in Mauritius, has promised 1 per cent of its profits before tax (460,000) for social projects this year and Barcl ays Bank (Mauritius) has dedicated Rs 400,000 for the fight against AIDS.While the introduce Bank of Mauritius launched scholarships to help the brilliant but needy students of the Gandhian elemental School, the Barclays Bank has adopted the fight against diabetes as its flagship cause. Thus it can be seen that corporate social responsibility is precise much present in the banking institutions of Mauritius. There is a belief that the growing of businesses and development of stakeholders must go together. Consequently, more and more companies are participating actively in corporate social responsibility.2.2 A Profile of HSBC Bank Mauritius circumscribedHSBC Bank (Mauritius) Limited is part of an international banking and financial services organisation with a interlocking of some 9,500 offices in 86 jurisdictions. (MBA Profile of Banks, 2010)The history of the HSBC Group in Mauritius can be mapped out from 1859, when the Chartered Mercantile Bank of India, capital of the United Kingdom and China (the predecessor of the Mercantile Bank Ltd) established a branch in Port-Louis. It started with community investment back then with the financing of one well-known project that was the construction of the Port Louis to Curepipe railway network, in 1864.In 1865, a decision was made to close the branch. The bank was represented by the Blyth Brothers and Co Ltd for the next half century. In 1892, the Chartered Mercantile Bank was renamed as The Mercantile Bank of India Limited and in 1916, it came back to Mauritius through the acquisition of not only the then Bank of Mauritius, which was previously a commercial bank but also its historic building in Place dArmes.Mercantile Bank conducted business from its main office at Place dArmes continuously. In 1959, the Hongkong and affect Banking Corporation Limited purchased the Mercantile Bank and in 1983, the name of the Groups operations in Mauritius was changed from the Mercantile Bank Ltd to The Hongkong and Shanghai Ba nking Corporation Limited.In 1999, the international brand name HSBC was launched. Finally in 2002, HSBC started on a campaign to distinguish its brand from those of its opponents by describing the eccentric characteristics that make out HSBC, abridged by the words The worlds local bank.2.2.1 armorial bearingTo be the worlds leading financial services company. We want to be the first choice for our customers and for our employees. If HSBC can be the exceed place to bank and the best place to work, we will have built a sustainable business that will deliver for the long term for customers, colleagues, shareholders and society at large.2.3 Corporate Social Responsibility at HSBC Bank Mauritius LimitedAt the HSBC, there is a culture to manage business in a responsible and sensitive manner. There is a belief to have a duty towards customers, investors and employees to promote an ethical, responsible and sustainable corporate philosophy.The social initiatives undertaken by the HSBC ar e channeled into different levels, that isInvesting in communitiesWorking togetherProtecting the environmentSustainable finance2.3.1 INVESTING IN COMMUNITIESThe HSBC aims to make a positive impact in all communities it operates. The community investment at the HSBC is mainly focused on two pillars which are education and environment.The educational support focuses on disadvantaged children such as orphaned children of the SOS Childrens Villages, on environmental and business literacy and environmental education and understanding.The HSBC Eco-Schools Climate Initiative was initiated in link with the Foundation for Environmental Education. The intention of the programme is to encourage action on climate change by improving schools environmental good organization.2.3.2 functional TOGETHEREmployeesAt the HSBC, employees are believed to be their greatest asset. There is a perception to look harder so as to understand things more deeply. Staffs are driven by the belief that they can fo rm a demote future. Their priority is to exceed customer expectation. There is neither labeling nor discrimination and customers are rewarded for their commitment.Promoting DevelopmentThe HSBC aims at promoting development of its employees not only through e-learning courses easy available both at home and at work but also through exchanges and overseas assignments.Committed to employees well-beingHSBC employees have admission fee to its gym to promote healthy living. Also available is an internal depository library with a collection of books on well being, yoga, healthy living and mark relief. The aim of the organization of the Health Week is to create awareness on the prevention of non-communicable diseases and to contribute by donating blood.CustomersCustomers are treated fairly and with respect. in spite of being strict, the lending criteria take into consideration the customers ability to repay the loan. There is adherence to the MBA Code of Banking Practice. To maintain a wareness about customer views, customer surveys are carried out.SuppliersSuppliers are required to abide by HSBCs policies and respect rights of employees. In case, after developing a plan to put a disturbance at rest, suppliers fail to improve, the HSBC stops working with them.2.3.3 PROTECTING THE ENVIRONMENTThe HSBC is very committed to the environment. In 2005, it became the worlds first carbon neutral bank. It is trying to perfect operations through environmental management systems.Water Saving compressIn 2008, the HSBC teamed up with the Central Water Authority to launch a wet saving campaign. It aimed to sensitizing the population about the scarcity of water and finding easy ways of saving water. Activities were organized internally, through the theme of Be Part of the Solution where staff got the opportunity to visit the meteorologic Station of Vacoas and externally, through billboards, daily radio advertisements and tips in local newspapers and statistical distribution o f 12000 educational leaflets.Sustainability of Office Infrastructure and Internet BankingAll in one device are being used to save energy. Consequently, there is a cutback in amount of equipment, consumption of electricity, toner cartridges and paper and maintenance cost. by means of the use of internet banking, the HSBC is trying to provide its customers with their banking needs while at the same time trying to reduce printing outcomes.2.3.4 SUSTAINABLE FINANCEThrough sustainable finance, the HSBC is trying to incorporate the environmental criterion in its lending policies. Consequently, the organization will be able to assist its clients in building environmentally sustainable busin