University of Vaasa - Vaasan yliopisto

613
Responsible leadership plays a critical role in the sustainability of the firm. A
company that embarks on the path of sustainability needs to carefully examine its
mission, vision and values. It must be informed about legal constraints and assess all
its management structures. Leaders should examine carefully the critical strategic
sustainability factors. Internal factors include managerial, operational, and
economical. External factors include market, government, and stakeholders
expectations (Szekely & Knirsch 2005).
Corporations are driven by profits, but still, they should play a more proactive role in
the sustainable development of the society. This means that they have to go beyond
their profit-oriented commercial activities and increase the well being of the society
around them (Malovics et al. 2008).
CSR and the Supply Chain
In response to customer and shareholder concerns for corporate social responsibility
(CSR), many buying firms are implementing programs within their supply chains
aimed at ensuring suppliers act in a socially responsible way with respect to such
labor practices and/or environmental issues. To transfer supply chain partners’
socially responsible behaviors, companies can use three management tools:
establishing written supplier requirements, monitoring supplier performance to verify
compliance with the requirements, and contributing to suppliers’ awareness building
and training on the company policy about CSR issues (Ciliberti, Pontrandolfo and
Scozzi 2008). Monitoring suppliers’ behavior to ensure compliance is important but
may damage buyer-supplier relationship. Therefore, a CSR implementation regime
characterized by procedural justice rather than by greater monitoring is more likely
to increase supplier compliance, and can improve rather than damage a buyer’s
exchange relationships with their suppliers (Boyd et al. 2007). A study conducted in
Italy reveals difficulties in transferring CSR behaviors to Small- and Medium-size
Enterprises that operate in developing countries. Some of the obstacles to diffuse
CSR practices in developing countries include: cultural differences, low interest
showed by customer in CSR, located and operating in developing countries, and
corruption in general (Ciliberti et al. 2008).
CSR Strategies
There are many external forces that drive organization to the path of CSR such as
consumer demand for responsibly made products, challenges to organizations’
reputations by nongovernmental organizations (NGOs), industry codes of conduct,
assessments and rankings of CSR performance, pressure from socially responsible
investors through public interest proxy resolutions, as well as the socially conscious
values of organizational managers and employees (Heslin & Ochoa 2008). Heslin
and Ochoa proposed seven principles where organization can embark on strategic
CSR. These principles are: 1) cultivate needed talent, 2) develop new markets, 3)
protect labor welfare, 4) reduce your environmental footprint, 5) profit from byproducts,
6) involve customers, and 7) green your supply chain.