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1. Why enterprises pursue social programmes
1.1  Introduction
1.2  Importance of Community for Business and of Business for Community

2. Corporate Community Involvement Programmes: Sharing Experiences
2.1   Building Businesss-Community Partnerships
2.1.1  What Makes Business-Community Partnerships Successful?
2.1.2  Practical Tips for Managers Willing to Get Involved in Partnerships: Two Checklists
2.1.3  A Development Model for Partnerships
2.1.4  Examples  of Successful Partnerships
2.2 Individual Examples of Corporate Involvement in Community Programmes
2.2.1  Programmes Aimed at Promoting Employability and Labour Market Development
2.2.2  Case Studies Involving Employee Secondment (Volunteer Programmes)
2.2.3  Microcredit Schemes
2.2.4  Case Studies of Community Involvement Programmes Related to an Enterprise’s Core Competencies  
2.2.5  Case Studies involving the Participation of Community Leaders in Decisions regarding the Introduction of Community Involvement Programmes  

3. Concluding Remarks and Some Preliminary Observations
3.1  What are the Factorswhich Explain the Success of Community Involvement Programes?
3.2  Cross-organizational Transfers of Innovative Practices
3.3  Cross-industry Transfers of Innovative Practices
3.4  Cross-national Transfers of Innovative Practices
3.5  The Role of Governments and Employers’ Organizations

4. Notes

5. References

Corporate Community Involvement Programmes : Partnerships for Jobs and Development
Nikolai Rogovsky^*

1.  Why  Enterprises Pursue Social Programmes

1.1  Introduction

Enterprise-sponsored programmes are becoming more widespread  in the business world as more and more enterprises are becoming concerned with the social implications of their activities. This concern is reflected in voluntary business initiatives such as the adoption of codes of conduct. Other growing and non-controversial kinds of corporate social initiatives include corporate involvement in community programmes. These may comprise employee secondment and volunteer programmes, training and education activities for local communities, microcredit schemes, supplying schools and small businesses with equipment, and local and regional job creation schemes. These programmes are attracting the attention of senior management and are being treated as part of mainstream business activities.

Why do enterprises implement these programmes? First, because there are strong external pressures from consumers, investors, media, local community leaders and other enterprise stakeholders.

As the twentieth century draws to a tumultuous close, the corporate world has assumed a position of unprecedented predominance over the state and other institutions of civil society.

With the growing role of business, come increased social expectations of what business should be doing for society. At the same time, enterprises also value the trust of stakeholders and want closer interaction with them. For instance, an enterprise’s superior performance increasingly depends on its capacity to anticipate and adjust not only to competition and rapid technological transformation, but also to changes in the attitudes of consumers, workers, and society at large.

External factors are supplemented by internal pressures for the introduction of social programmes. These stimuli are related to a reassessment of the sources of competitive advantage (the `competitive advantage’ factor), as well as to the attitudes and values of employees and managers (the `values/leadership’ factor).

1.1.1 The Competitive Advantage Factor

There is growing evidence that trade liberalization and the new generation of information technology have made traditional competitive advantages less significant. Also, detailed information on new products and processes are increasingly difficult to come by. In such a situation, senior management in enterprises are searching for new, hard-to-imitate, less tangible sources of competitive advantage. These `soft sources’ may include social programmes, such as community involvement programmes.

1.1.2 The Values/Leadership Factor

Executive leadership support and pressure from employees are some of the important reasons for the success of corporate involvement in community programmes. However, Altman’s (1998) research shows that such executive leadership support for change is necessary, but not sufficient. It should also be based on the willingness of employees to contribute to community development. Altman defines employees as a "critical part of the leadership team for corporate community relations". She goes on to state: "Employees live in the community and are ambassadors. New CCR [Corporate Community Relations - NR] companies are recognizing this asset and are encouraging employees at the local level to provide input to plant or store managers on worthwhile community initiatives. Employees see a merging of their personal and professional lives; they expect their companies to support the community issues they support in their personal lives, so the opportunity to provide input is equally beneficial to them." (Altman, 1998).

The importance of both external and internal factors in motivating corporate social programmes was brought out in a recent study by Chris Marsden and Anupama Mohan. The study analysed the database of 505 social projects of 340 European enterprises of the European Business Network for Social Cohesion, EBNSC (discussed later in the Paper). Nearly all the companies surveyed stated that they were involved in social progammes for business reasons, "responding either to internal needs (39 per cent) or external social stimuli (38 per cent), or indeed both (23 per cent)" (CSR Magazine, 1999).

As a reflection of these external/internal stimuli, business leaders are increasingly recognizing that they need to do more for society. The results of a survey carried out among British `captains of industry’ by MORI, the UK polling organization, revealed a significant shift in their attitude to the statement : "Industry and commerce do not pay enough attention to their social responsibilities". In 1995, 25 per cent agreed to the statement, while 62 per cent disagreed; but, in 1998, 39 per cent agreed and 40 per cent disagreed (Grayson, in The Financial Times, June 1999).

The way an enterprise responds to social pressures and seeks new sources of competitive advantages through community involvement, is specific to each individual enterprise. However, it is important to highlight some common approaches in order to inform business leaders on the practical steps they can take and the main options they have in undertaking such initiatives.  Community involvement programmes, along with codes of conduct, should be seen as the core of an enterprise’s social strategy.

This paper attempts to explore how enterprises carry out community involvement programmes and the factors which explain the objectives, structure and mode of financing of these programmes. We look at two broad groups of community involvement programmes: partnerships involving enterprises and community actors, and initiatives carried out by individual enterprises. The cases presented here cover different programmes in different countries¹ at varying levels of integration into mainstream enterprise activities.

In the third section, the paper explores a number of issues related to the conditions required for the successful transfer of innovative practices in corporate community involvement across enterprises, sectors, and countries. It also looks at the possible response of governments and employers’ organizations to the introduction of such programmes.

To start the discussion, however, it is necessary to briefly review two issues : the importance of community relations for the enterprise, and the benefits that the enterprise can bring to the community.

1.2 Importance of Community for Business and of Business for Community

The community creates the environment for the enterprise.² How an enterprise interacts with the community in which it operates is critical to its performance as well as to the development of the community. Those enterprises which understand this, pay a lot of attention to community issues. Based on the definition of the World Business Council for Sustainable Development (WBCSD), "Community issues cover a broad range of activities, including community assistance programmes; supporting educational needs; fostering a shared vision of a corporation’s role in the community; ensuring community health and safety; sponsorship; enabling employees to do voluntary work in the community; philanthropic giving" (Watts et al., 1999, pp. 8).

The organizational function of corporate community relations is defined by the Center for Corporate Community Relations at Boston College³ as :

"The state of relations between the company and the communities (local, national, or global) in which it has a presence or impact. It encompasses programs which advance the interest of both the company and its communities, such as donations and contributions of all kinds, employee volunteerism, community-based programs, relationships with civic, professional, and nonprofit organizations, and corporate citizenship activities" (cited from Altman, 1998, pp.15).

Corporate community commitment is an integral and, perhaps, even one of the most important (in terms of ILO objectives) part of a company’s corporate social activities, often referred to as corporate citizenship. Boston College’s `20 Principles of Corporate Citizenship’ stresses that `community commitment’ is an integral part of  `stakeholder commitment’ (Davenport, 1998, pp. 6) :

Box 1.1 Twenty Principles of Corporate Citizenship I. Ethical Business Behaviour : Engages in fair and honest business practices in its relationships with stakeholders Sets high standards of behaviour for all employees Exercises ethical judgement at executive and board levels II.  Stakeholder Commitment: The company is "well-managed" for all stakeholders  Initiates and engages in genuine dialogue with all stakeholders III. Community Commitment : Fosters a reciprocal relationship between the corporation and the community Invests in the communities in which it operates IV.  Consumer Commitment : Respects the rights of consumers Offers quality products and services Provides information that is truthful and useful V.     Employee Commitment : Provides a family-friendly work environment Engages in responsible human resource management Provides an equitable reward and wage system for employees Engages in open and flexible communications with employees Invests in employee development VI.  Investor Commitment : Strives for a competitive return on investment VII.  Supplier Commitment : Engages in fair trading practices with suppliers VIII.  Environmental Commitment : Demonstrates a commitment to the environment Demonstrates a commitment to sustainable development

Source : Davenport (1998)

Why do business and community need each other? The answers given in a number of studies are summarized in Box 1.2 :

Box 1.2 Corporate Involvement in Community Programmes: Community to Business and Business to Community
Community to Business	Business to Community
Better reputation and corporate image Social `license to operate’ Share local knowledge and labour Greater security Better socio-economic environment and infrastructure Attract and retain a high calibre highly commited personnel Attract high quality local workforce, suppliers, service providers, and possible customers `learning laboratory’ for corporate innovations1	Opportunities for job creation, work experience and training funding community investment, infrastructure development commercial expertise personal and technical competence of individual employees involved business representatives as promoters (spokespersons) for community initiatives
Sources: Nelson (1998), Gribben et al. (1998), Kanter (1999) 1. It should be noted here that Kanter (1999) adds an important type of benefit that enterprises can get from community involvement programmes- namely that the community can be used as a `learning laboratory’ for corporate innovations. This approach differs greatly from the `traditional’ approach where `business viewed the social sector as a dumping ground for spare cash, obsolete equipment, and tired executives’. Kanter believes that: "Winning in business today demands innovation... That’s why companies spend billion of dollars each year trying to identify opportunities for innovation... They set up learning laboratories where they can stretch their thinking, extend their capabilities, experiment with new technologies, get feedback from early users about product potential, and gain experience working with underserved and emerging markets... Today’s several leading companies are beginning to find inspiration in an unexpected place: the social sector - in public schools, welfare-to-work programs, and the inner city. These companies have discovered that social problems are economic problems, whether it is the need for a trained workforce or the search for new markets in neglected parts of cities. They have learned that applying their energies to solving the chronic problems of  the social sector powerfully stimulates their own business development. Today’s better-educated children are tomorrow’s knowledge workers. Lower unemployment in the inner city means higher consumption in the inner city. Indeed, a new paradigm for innovation is emerging : a partnership between private enterprise and public interest that produces profitable and sustainable change for both sides." This is clearly an indicator of a move from the public relations approach to making social programmes related to the core competencies of the enterprise (examples of such programmes will be discussed later in the paper).

The benefits (and costs) of specific community involvement programmes for both business and community can be rigorously  measured. An interesting example is presented in Box 1.3.

Box 1.3 A Case Study : The BP Employee Volunteer Programme A recent book brought out by Ashridge Research (Gribben et al., 1998) refers to the pioneering work of Alan Smithers and Chris Marsden (1992) who produced a report entitled Assessing the Value. They produced a matrix illustrating the benefits of  BP’s programme of contribution to the local community. The company supported an employee volunteer programme by encouraging its staff to work with a community group helping young people into employment through advice and training. This matrix looks at the benefits of this programme for both the company and the community.
	The Company Perspective	The Community Perspective
INPUT	Number of people involved x hours = person hours Person hours x costs = £	Resources levered in from other companies/sectors
OUTPUT	Positive press coverage Improved rating as a `caring employer’ on staff attitude surveys	Number of students offered work experience Number of people put on training courses
OUTCOME	Improved skills of volunteers Widening horizons of graduate recruits	Number of people who secured jobs within six months Impact on local economy in terms of wealth creation
Source : Gribben et al. (1998) As we can see, the benefits of the community involvement programme can be viewed through two sets of distinct, but complementary measures. These measures show that a programme like this could easily be a `win-win’ situation for both the enterprise and the community.

The evidence presented in this paper and elsewhere, suggests that there is a clear trend which shows that business is increasingly recognizing the `win-win’ approach to community relations, and placing increasing importance on its community involvement function. For example, in a 1996 survey of major US corporations, Post and Griffin (1997) found that  23 per cent of the companies surveyed had added a community relations office in the past four years (cited from Altman, 1998, pp. 16). In Europe, community involvement programmes are even more widespread.

The growing realization of the importance of the community for business has resulted in a situation where enterprises view community involvement programmes as a critical business activity.

Altman’s (1998) work provides empirical evidence that in an increasing number of US enterprises :

• community involvement is no longer considered discretionary; it is considered a business necessity;
• community responsibility and economic goals can, and should be merged;
• community relations are viewed as a managerial activity, distinct from public or external relations.

The study of Marsden and Mohan show comparable results for European enterprises. The most interesting findings of the study in this connection are that (CSR Magazine, 1999) :

• 94 per cent of the 505 social projects of 340 European enterprises studied were considered as yielding business benefits;
• 84 per cent were directly linked to mainstream objectives;
• 78 per cent involved active stakeholder collaboration.

For enterprises, these findings mean that, "many of the larger ones at least, are recognizing a link between their success and the strength of the communities around their operations. For those trying to influence business engagement with social issues, it means that they should look for programmes which can be closely aligned with a particular company’s interests and objectives and should seek a collaborative approach" (CSR Magazine, 1999). More on public policy implication will be discussed in the final part of this paper.

The view that social projects are a business necessity (a view increasingly shared by many enterprises) prompts corporate involvement in business-community partnerships, where community programmes can be carried out by a single enterprise. These two groups of cases are discussed below.

2. Corporate Community Involvement Programmes : Sharing Experiences

2.1 Building Business-Community Partnerships

2.1.1 What Makes Business-Community Partnerships Successful?

In general, business-community partnerships are more complex than typical business-to-business partnerships (Kanter, 1999). "Government and non-profit organizations are driven by goals other than profitability, and they may even be suspicious of business motivations. Additionally, the institutional infrastructure of the social sector is underdeveloped in business terms" (Kanter, 1999).

These difficulties can be overcome, however, if private-public partnerships have the following characteristics :

Box 2.1 Characteristics of Successful Business-Community Partnerships

A clear business agenda Goals which are aligned to business objectives Offering the potential for employee involvement Clearly defined and realistic expectations Mutual respect and a willingness to learn Strong partners committed to change A transparent and honest relationship Flexible working relations Commitment to ongoing and regular communications Investment by both parties1 Rootedness in the user community2 Links to other community organizations3 A long-term commitment to sustain and replicate the results

Sources : Kanter (1999), Gribben et al. (1998) 1. "The best way to ensure full commitment is to have both partners- not just the corporate but the community partner also- put their resources on the line. Investment by both partners builds mutuality.  It also ensures that the community partner will sustain the activities when contributions from business taper off" (Kanter, 1999). We believe, however, that such joint investment is not always possible, especially in developing countries. 2 One should not underestimate potential cultural differences between enterprise culture and community culture. Such differences can be serious even if an enterprise becomes involved in community programmes in its home country. Therefore, the success of business-community partnerships depend on the extent to which an enterprise and its employees can get `accultured’ to a community. 3 Enterprises must call on the expertise of other organizations, such as research centres, universities, government institutions, employers’ organizations and unions.

2.1.2 Practical Tips for Managers Willing to Get Involved in Partnerships : Two Checklists

Based on the experience of a British organization called BNFL, Ashridge Research suggests a list of questions that each enterprise management should ask before joining any partnership with community organizations :

Checklist 1. Enterprise Management : What Do We Know About This Partnership?

What are the aims and objectives of the partnership? Who will benefit from the partnership? How and why is the partnership established? Who is involved? What resources, time, money, expertise and knowledge are on offer? What support is necessary for the partnership to succeed? Is a partnership the best way of tackling the perceived need?

Source : Gribben et al. (1998)

Getting partnership initiatives off the ground and working together effectively require that enterprise management  develop an action plan for its involvement in the partnership. Ashridge Research (Gribben et al, 1998) gives a checklist of eight critical success factors in ensuring that partnerships really work. This checklist might help an enterprise to develop an action plan for its involvement in a partnership:

Checklist 2. Enterprise Management: What Can be Done to Make a Partnership Work :

Treat each partnership as an opportunity to allow people from very different backgrounds to learn from each other, and from the different pressures and constraints they face in their sectors

Make every effort to understand the perspective of others involved in the partnership; set aside the personal prejudices of other sectors, and be open and honest so that others can understand what you are able and unable to bring to the partnership

Identify the different stakeholder groups and take appropriate action to ensure that they do not feel alienated or threatened. Partnerships often falter because key influences have not been involved in formulating the partnership

Where there is a choice about who joins the partnership, look for individuals who have the skills and willingness to contribute and see them as a gateway into their organization

Where an initiative has a powerful advocate or  charismatic leader, make use of their energy, enthusiasm and ability to inspire others in the creation of a common vision of the partnership

Develop a mission statement that will bring all the partners around an agreed set of aspirations; and outline the specific targets and goals of the partnership

Positive publicity can make life much easier for partnerships- facilitating access to funds and other resources and wider involvement. The PR strategy needs to be planned along with other elements of the partnership

Part of a successful management process must be the readiness to question the continuing viability of an initiative beyond the intended life span. Partners must be prepared to ask : "has the partnership done what it set out to do?"

2.1.3 A Development Model for Partnerships

Once the principles and aims of the partnership are clear and an action plan is developed, an enterprise can analyse the key stages of the partnership development process and anticipate what challenges might arise at each of the stages. Ashridge Research- part of a programme of work undertaken for the Joseph Rowntree Foundation- has produced a five-stage development model for partnerships, which includes partnerships in the field of community involvement.

Box 2.2 A development model for partnerships

Stage 1 : The partners come together through the mutual recognition of a common need, or in a joint effort to obtain public funds If they have not worked together before, the partners begin the process of overcoming differences in backgrounds and approach, building trust and respect There may be a need for training, building each partner’s capacity to operate effectively in this new organization

Stage 2 : Through a process of dialogue and discussion, the partners establish the common ground and work towards agreeing a vision and mission statement for the initiative The original core group of partners might agree on the need to involve more individuals and organizations in the initiative The partners develop mechanisms for assessing needs and quantifying the size of the task they propose to undertake The initiative combines the information generated by the needs assessment exercise together with the vision and mission statement to produce an agenda for action

Stage 3 : The formal framework and organizational structure of the partnership is designed and put in place The partners set specific goals, targets and objectives linked into the agenda for action Where appropriate, the executive arm of the partnership selects or appoints a management team (even if this is one person) to oversee the work of the initiative

Stage 4 : The partnership delivers its action plan, whether this be service provision or some other function The executive arm seeks to maintain the involvement of all partners, formulates policy decisions and ensures the continuing accountability of the partnership There is an on-going process of assessing, evaluating and refining the operations of the partnership

Stage 5 : Where appropriate, the partners should plan their exit strategy. This involves developing a new set of goals for the survival and continuation of the work of the initiative in some form They should seek to create "life after death" by transferring assets of the partnership back to the community with which they work

Source: Gribben et. al. (1998)

2.1.4   Examples of Successful Partnerships

Three case studies of business-community partnerships are presented in this section. Case 1 summarizes some of the community involvement programmes aimed at the economic and social renaissance of cities in different parts of the world. Case 2 describes the work of one of the best-known organizations in Europe for its efforts in promoting some of the most innovative corporate community involvement programmes. Case 3 describes in detail the South African experience in business-community partnerships. It shows that such partnerships can be found not only in the most advanced economies, but also in economies in transition, where, perhaps, the demand such partnerships is even higher.

Case 1 : Some Experiences in City Development

The Prince of Wales Business Leaders Forum (PWBLF) reports some examples of community development partnerships involving private enterprises and aimed at the development of specific cities (Nelson, 1998). These include programmes such as: Cleveland 2000, where two companies, TRW and BP, joined forces with other businesses and local government to revitalize this city; the Krakow Development Forum, where BP played a leading role with a group of Polish and foreign companies in helping local government and voluntary organizations  to rebuild the economic base, the environmental sustainability and the cultural heritage of this Polish city and its hinterland; the Hong Kong Private Sector Committee of the Environment which works closely with the Hong Kong government to address a variety of environmental policy issues; and the Central Johannesburg Partnership, consisting of major companies operating in central Johannesburg, and aimed at addressing the problems of economic decline, rising crime and urban flight.

Case 2 : The European Business Network for Social Cohesion

Nelson (1998) also reports the activities of the European Business Network for Social Cohesion (EBNSC). According to Nelson, critics of large companies argue that, because of the relative capital-intensity of these companies, they are not particularly good at job creation. She further states : "This is true in the sense that the majority of new jobs being created, be it in America or Africa, are in the small and microeconomic sector, rather than through big business. On the individual basis, however, most multinational companies have a positive impact on job creation, both  as  direct  employers and as the impetus for other jobs created along their value chain" (Nelson, 1998 : 41). The European Business Network for Social Cohesion is one example of a business-to-business (as also a business-to-government) partnership created to tackle problems of job creation and social exclusion, which mainly involves large enterprises.

The origins of the EBNSC go back to January 1995 when a group of European business executives approved the European Declaration of Business Against Exclusion, in the presence of the then President of the European Union, Jacques Delors, and the Commissioner, Pydraig Flynn. This `European Manifesto’ was signed in May 1995. It was a voluntary initiative taken by the corporate sector to look for ways to enhance their social responsibility; the decision was taken to create the Business Network.⁴

The mission of the EBNSC is defined as follows: "EBNSC is a European business-driven membership network whose mission is to encourage and help companies to prosper in ways that stimulate job growth, increase employability and prevent social exclusion; thereby contributing to a sustainable economy and a more just society. EBNSC, in partnership with others, acts as a Resource Centre and wants to become a reference point in Europe on Social Corporate Responsibility and Strategies for companies, as well as organization and academics." The list of member-companies include such well-known companies as Accor, Bayer, BT, Diageo, France Telecom, IBM, Johnson and Johnson, Levi Strauss, Philips, Shell, Siemens, Unilever and many others.

The EBNSC’s Fields of Action are defined in accordance with the European Declaration of Business against Social Exclusion:

• Workplace policies and management methods more favourable to employment
• Creation of new jobs, small and medium-sized enterprises
• Community involvement to support the social integration of marginalized groups

The Objectives of the network are to :

• Identify and exchange business experiences
• Facilitate the development of projects and the transfer of best practices
• Make political, economic and social actors aware of corporate social initiatives

The European Declaration of Business against Social Exclusion also defines Five Main Areas where companies can take practical action :

• Promoting integration on the labour market
• Helping to improve vocational training
• Avoiding exclusion within the business and minimizing redundancies or providing for appropriate measures where they are inevitable
• Promoting the creation of new jobs and businesses
• Contributing to social integration in particularly of deprived areas and of particularly marginalized groups

Currently, EBNSC is carrying out six Major Programmes :

• Gaining from Diversity
• Entrepreneurship and SMEs
• New Instruments for Measuring Corporate Social Initiatives
• Universities and Corporate Social Responsibility
• Business Education Partnerships with Universities and Business Schools
• Finance, Employment and Social Cohesion.

These six programmes correspond to EBNSC’s mission of identifying and sharing successful strategies contributing to responsible citizenship and corporate profitability. All the programmes focus on community involvement and development.

Case 3 : The Business Trust: A Case Study from South Africa

Business partnerships to promote corporate citizenship and community involvement have been launched in the transition economies as well. The Business Trust is a new initiative that brings South African business and government together in order  (Murray, in  The Financial Times, June 1999) to :

• improve schooling
• promote job creation in the tourism industry, seen as the sector with the highest growth potential.

It started in September 1998, when a group of powerful banks and industrial conglomerates announced the launch of this 1 billion South African rand (US $ 160 million) programme aimed at creating jobs and developing training. The initiative was welcomed by the South African government. So far, 140 companies have committed themselves to the trust; a further 200 companies are considering participation.

The initiative requires different levels of involvement by enterprises as compared to many other social responsibility programmes in South Africa. Enterprises are expected to contribute on the same basis as listed companies and donate the equivalent of 0.15 per cent of their market capitalization, and non-listed companies to contribute 2 per cent of their after-tax earnings. The partnership will enable enterprises not only to contribute financially but also to `apply their business logic to development’.

The first component of the programme aims at creating jobs. South Africa is a country where a First World corporate environment stands in stark contrast to the miserable conditions in much else of the country, with housing, healthcare and running water in short supply. But of all the social problems, unemployment, estimated at 30 per cent of the workforce, is seen as the most serious. Tourism was the natural choice as the focus of a job creation programme. "A survey carried out last year by SRI International estimated that the potential additional jobs provided by the sector by 2005 would be 450,000, compared with 60,000 by construction, which came second in the survey’s ranking" (Murray, in The Financial Times, June 1999). The trust also intends to raise South Africa’s profile as a tourist destination by increasing international marketing efforts. This part of the programme can benefit from the core competencies of enterprises which do not have to belong to the tourism industry, but are known for their strong marketing skills.

As for the second component of the programme- human capacity development- schooling was picked as the focus for attention. David Brink, chairman of the construction company, Murray and Roberts, and co-chairman of the Board of Trustees of Business Trust, believes that: "The government is spending a huge proportion of the budget on education but it is not that effective because teachers have no experience in management. Our intervention in management will be very important" (The Financial Times, June 1999). The programme will also enable enterprises to apply their core competencies to areas such as training, managerial development and organizational design.

This partnership thus represents a new kind of relationship between business and government in South Africa. These relationships were not always necessarily friendly in the past. "The trust’s aims have been aligned with national priorities. Its executive committee comprises 12 trustees from the business sector, plus the co-chairman, and eight government representatives" (Murray, in The Financial Times, June 1999).

Although partnerships of this kind are powerful instruments enabling business to contribute to communities, more corporate contribution is in fact made through individual enterprises, where community involvement programmes often become an additional distinctive source of competitive advantage. In other words, an individual enterprise often prefers to come up with its own community involvement programme, for which it is fully responsible and the benefits of which it fully enjoys, rather than share the funds and benefits with other enterprises.⁵

The EBNSC has a Resource Centre on Corporate Social Responsibility and Community Involvement which is a powerful reference point in Europe. Its ‘best practice section’ contains over 500 specific cases of innovative, socially sound corporate practices in Europe. Similar databases can be found in other organizations such as Ashridge Research, or the PWBLF. Numerous such cases have been discussed by leading academics and consultants.

Some of these community involvement programmes carried out by individual enterprises are discussed below.

2.2 Individual Examples of Corporate Involvement in Community Programmes

This section describes some individual examples of corporate involvement in community programmes and seeks to answer three general questions which could explain what motivates enterprises in initiating and managing community involvement programmes :

• can a community involvement programme be a distinctive source of enterprise competitive advantage? If so, then,
• how can a community involvement programme become such a distinctive and significant source of competitive advantage- either simply as a contribution to improved corporate image, or also as an integral part of the enterprise’s core competencies?⁶  If both, then,
• how can an enterprise identify the core competencies which would enable it to offer something valuable- perhaps unique- to the community?

While these questions could have been asked in the previous section while discussing multiple enterprise community initiatives, the answers will become clearer when we take an individual enterprise’s position. This will also enable us to examine in greater detail an individual enterprise’s objective, its management systems and modes of financing as also the variables which explain the ways in which a community involvement programmes is carried out.

Various types of community involvement programmmes are presented here, which are managed in different ways and which provide different benefits for the enterprise and the community.

We start by highlighting some of the more traditional examples of community involvement programmes- such as those which aim at achieving higher levels of employability in the local community and developing the local labour market; and employee volunteer programmes and microcredit schemes. Then we will focus on some of the more innovative programmes which relate community involvement schemes to an enterprise’s core competencies. And last, we look at some cases which emphasize the importance of involving community representatives and other stakeholders in decision-making regarding the introduction of community involvement programmes.

2.2.1 Programmes Aimed at Promoting Employability and Labour Market Development

Many community involvement programmes are aimed at promoting employability and labour pool development. The results of the study by Marsden and Mohan (mentioned earlier) show that most enterprises are involved in employability issues (74 per cent) both within their own organization and externally (CSR Magazine, 1999).

Case 1 : IBM

This is an example (taken from CSR Magazine, June 1999) of a company which contributes to the employability level of a community through its international "Training for Work" programme. This programme uses technology to deliver "flexible training tailored to the needs of unemployed people. Developments in technology using advanced information software, networked systems, and multimedia are revolutionizing the management and delivery of education and training services. These developments are particularly relevant for unemployed people as training becomes more flexible and tailored to individual needs. Training can take place "anywhere, anytime" so the learner can work at his or her own pace; support can be delivered electronically through on-line systems, remote tutors and discussion groups" (CSR Magazine, June 1999).

IBM is currently sponsoring seven projects that use technology to ‘create bridges into training’ and to deliver formal vocational training programmes. These projects, in the following countries, include :

• Portugal: Centro de Reabilitacao Profissional de Gaia offers software for skills assessment, information on training programmes, training for job applications and interviews, and job matching.
• France: Centre de Formation d’Apprentissage Stephenson has developed a computer-based portfolio of competence and database for career planning information.
• Denmark: Open Data Centres Naestved Kommune use a distributed learning network to deliver training, enabling remote tutor support, on-line testing, and electronic monitoring.
• Ireland: Senior College Ballyfermot has developed an on-line course programme in computer games design for unemployed people without formal qualifications.
• United Kingdom: Brunel University Department of Continuing Education delivers training electronically to informal community settings.

Case 2 : The Royal Dutch/Shell Group of Companies

The Royal Dutch/Shell Group has been involved in community development programmes for a long time. The main elements of its programmes are corporate community donations and projects aimed at the promotion of employability and entrepreneurship in the community.

These programmes are in line with Shell’s `Statement of General Business Principles’. This document states that, "The objectives of Shell companies are to engage efficiently, responsibly and profitably in the oil, gas, chemicals and other selected businesses and to participate in the search for, and development of other sources of energy. Shell companies seek a high standard of performance and aim to maintain a long-term position in their respective competitive environments" (Shell, 1997). One of Shell’s corporate principles (Principle 7) highlighted the importance that Shell places on its role in the community: "The most important contribution that companies can make to the social and material progress of the countries in which they operate is in performing their basic activities as effectively as possible. In addition, Shell companies take a constructive interest in societal matters which may not be directly related to the business. Opportunities for involvement- for example, through community, educational or donations programmes- will vary depending upon the size of the company concerned, the nature of the local society, and the scope for useful private initiatives" (Shell, 1997).

The Shell Report 1999 entitled People, Planet and Profits. An Act of Commitment records the achievements of the corporation in following its principles. Its contribution to society is illustrated by the following number of facts (Shell, 1999):

• The total value of Social Investment contributions in 1998 by Shell companies was some US $ 92 million. This represents an increase of 18 percent over the previous year. Some of this increase is the result of improved data gathering.
• Over the five years, from 1994 to 1998, Shell has contributed an average of 1.18 per cent (an average of 1.05 per cent from 1994 to 1998) of its net income after tax-equivalent to 0.63 per cent of its net income before tax.
• Shell companies in 65 countries have processes in place to evaluate the community benefit of their contributions.
• In 91 countries, Shell companies have processes in place to engage with local communities on issues of local concern.

The company’s 1999 report illustrates Shell’s community involvement approach by giving as an example its youth support programme in Brunei: "Shell Brunei is supporting the government in a youth entrepreneur development programme. Job seekers enrol to learn a trade and how to run a business. Shell Brunei guarantees bank loans made to participants who are treated as business partners. The scheme started in June 1998, with 17 partners who have developed a 45-acre site into a showcase for agro-tourism, including vegetable plots, fruit orchards, fish ponds and a restaurant" (Shell, 1999).

2.2.2 Cases Studies Involving Employee Secondment (Volunteer Programmes)

One of the most common types of corporate community programmes is the employee secondment programme, where an employee is loaned to work on community programmes or volunteers to do so.  These programmes are not only aimed outwards, like the `employability’ programmes, but also inwards- since they bring benefits not only to the outside community, but also to the employees of an enterprise. The first case study (Marks and Spencer) is an example of an enterprise which was able to identify the separate benefits of the employee secondment programme: benefits for the individual employee, the community (receiving organization) and the company itself.

Case 1 : Marks and Spencer.

This retail company has identified the following benefits of its employee secondment programme- where, its employees are seconded to work for community organizations (Gribben et al., 1998):

Benefits for the individual employee :

• learning alternative business methods
• meeting the challenge of developing and achieving in a new environment
• developing new and existing skills
• improving the company’s knowledge of the local community, and making contributions to it
• acquiring a new perception of the business

Benefits for the receiving organization:

• acquiring professional expertise and skills for which the organization may not have had the necessary funds otherwise
• acquiring management skills which bring a fresh, creative approach to problem solving
• gaining experience from a large organization resulting in a more business-like approach

Benefits for the company:

• enhanced capabilities of the  returning secondee
• opportunity to invest practical help in the ccommunity
• increased knowledge of the local community
• enhanced company image and profile as the secondee becomes the company’s "ambassador".

Employee secondment can thus be viewed as a mainstream business activity, since it improves the skills of employees and, as a result, contributes to enterprise performance. Employee secondment programmes are often accompanied by corporate donations of equipment and other assets as illustrated by the second case study.

Case 2: Intel

This is a case which combines the employee secondment programme with the provision of equipment towards community educational facilities. Having understood that education is an essential component of local development and that it contributes at the same time to the enterprise’s success, Intel assists countries in which it operates by providing money and resources to local schools, and by having its employees volunteer and work as mentors for local students (Dunfee and Hess, forthcoming). A manager for Intel Corporate Contributions states: "This is a strategic investment.  Every one of our programs has a component in which an employee has to be involved." (Dunfee and Hess, forthcoming). These programmes were originally launched in the US, and have since been shifted to Ireland, Malaysia, the Philippines, and Costa Rica. In the Philippines, for example, children in schools have gone from no exposure to technology to receiving Intel’s used computers- a practice referred to as "waterfalling" (Dunfee and Hess, forthcoming). In addition, Intel sponsors an international science fair, which brings high school students from over 40 countries to the United States to compete for prizes, and more importantly, as a gateway to higher education at home or abroad.

2.2.3 Microcredit Schemes

Microcredit schemes are yet other forms of corporate involvement which help to alleviate poverty and create jobs. The microcredit practice was pioneered over 20 years ago by Muhammad Yunus, the founder of the Grameen Bank. Yunus used premiums from insurance policies to provide initial small amounts of credit to groups of people, often for the development of craft businesses (Dunfee and Hess, forthcoming). Since then, the Grameen Bank alone has lent the equivalent of US $2.1 billion to over 2 million people in Bangladesh; 94 per cent of whom were women (Melvin, 1998; Authers, 1998). The payback rates have been exceptionally high.

Microcredit schemes have lately become part of community involvement activities undertaken by multinational enterprises.

Case 1: The Lloyds TSB Group

This is an example of a microcredit scheme that was recently launched in the UK.  Lloyds set up an innovative pilot scheme in Portsmouth, UK, designed to "bring mainstream financial services to deprived areas. A collaboration between public, private and voluntary sectors, the project will offer small loans to people who would fail the standard high street bank’s credit test. The scheme is one of a number of initiatives being sponsored by banks and insurers to tackle `financial exclusion’, whereby low-income people are denied access to financial services, such as banking, credit and insurance, a problem affecting millions of families in the UK" (Eaglesham, in The Financial Times, June 1999).

Case 2: The Microcredit Summit

It has been reported recently that Monsanto and Citicorp have provided significant funding to the Microcredit Summit, which is a group of over 1,000 private organizations that provide small loans, generally less than $100, without collateral, to individuals in developing countries attempting to start a business (Dunfee and Hess, forthcoming).

Microcredit loans are not a panacea, but they offer a valuable practice which enables the economies of developing countries to be strengthened from the bottom up (Dunfee and Hess, forthcoming). While several sources report a repayment rate of over 95 per cent on these loans (Authers, 1998; Platt, 1998; the Washington Post, 1998), subsidization by corporations such as Citicorp and Monsanto becomes necessary to provide below market rates of interest and allow the microcredit industry to attain its goal of providing loans to 100 million families throughout the world (Platt, 1998; Dunfee and Hess, forthcoming).

2.2.4 Case Studies of Community Involvement Programmes Related to an Enterprise’s Core Competencies

Although most communities would be grateful for any help from the business sector, traditional community involvement programmes, such as employee volunteer programmes, microcredit schemes, or donations, could be significantly improved by making them directly related to an enterprise’s core competencies. This could be done if community involvement programmes become part of corporate innovation policy.⁷  Kanter (1999) provides some examples of how tackling community problems enables enterprises to stretch their capabilities to produce innovations that have larger business as well as community payoffs.

When enterprises relate their community programmes to their innovative policies, they treat these programmes as any other project "central to the company’s operations. They use their best people and their core skills. This is not charity, it is R&D- a strategic business investment" (Kanter, 1999, pp. 124). Kanter’s examples cover cases of both technological (product) and organizational innovations acquired/tested through corporate community involvement programmes.

Case 1:   Bell Atlantic’s Product Innovation Policy and Community Involvement Programme

Bell Atlantic’s Project Explore, launched in 1991 in Union City, New Jersey, to create one of the first-ever models for using computer networks in public, mainly inner city schools, brought significant benefits to the community and, at the same time, allowed Bell Atlantic to test its research findings and, as a result, find some new ways of handling data transmission (see more in Kanter, 1999). The case illustrates the coincidence of social and business needs. This is a clear case of a mainstream business project that was funded out of operating and technology-development funds. The costs were high, but the benefits happened to be even higher. Besides the fact that employees certainly felt good about their opportunity to help inner city schools, Bell Atlantic also generated "a continuing and growing revenue stream from selling network services to the education market, which it learned how to approach from its extensive experience in Union City" (Kanter, 1999). But the most noticeable benefit for the enterprise was the technological know-how Bell Atlantic developed through the project. In 1997, four Bell Atlantic employees received a patent for a public-switch telephone network for multimedia transmission- a direct result of the innovations developed during Project Explorer. Kanter further elaborates: "That patent ultimately led to the introduction of Bell Atlantic’s new Infospeed DSL product line in 1999" (Kanter 1999, pp. 124).

Case 2:    Marriott International’s HR Innovations and Community Involvement Programme

This hotel chain combines its community involvement programme with the testing of its innovative HR practices. Kanter (1999) presents the following description of the Marriott case: "Since 1991, the hotel group Marriott International has been refining its pioneering training program, Pathways to Independence.⁸  The program, which currently runs in 13 US cities, hones the job skills, life skills, and work habits of welfare recipients, and Marriott guarantees participants a job offer when they complete the program. The challenges of working with the unemployed has led the company to new insights about training, job placement, and supervision, which have helped Marriott reap the benefits of a more stable workforce and maintain unusually high standards of service. Pathways was a radical improvement on traditional programs for the hard to employ, which were both bureaucratically cumbersome and often ineffective. The employee assistance innovations that Marriott has developed through the program have also created new jobs in poor communities".

This case is another illustration of a programme that addresses community issues from a corporate business perspective. Kanter (1999) further explains the business importance of the Pathways programme: "Over two-thirds of the company’s 131,000 employees are entry level, lower-wage workers in housekeeping, engineering, security, maintenance, food service, and reservations. Developing an effective method to recruit, train, and retain workers in these positions has always been a critical concern. Throughout the 1980s, Marriott had reached out to untapped pockets of the labor market, such as Vietnam veterans, ex-offenders, the disabled, recent immigrants, and welfare mothers. Although the company received tax credits as a financial incentive, Marriott continued to be plagued by high level of turnover and poor job performance. By the beginning of the 1990s, the company badly needed new sources of reliable labor. After some experimentation, the first viable Pathways program was launched in Atlanta, Georgia in 1991. Since then, Marriott has not only reduced turnover rates but also improved job prospects in inner cities"

Kanter (1999) also shows that Pathways to Independence has produced some tangible benefits for Marriott: "About 70 per cent of Pathways’ graduates are still employed by Marriott after a year, compared with only 45 per cent of the welfare hires who did not participate in Pathways and only 50 per cent of other new hires. Marriott estimates that program costs are recovered if graduates are retained 2.5 times longer than the average new hire. In fact, Pathways is considered to be such a source of competitive advantage for Marriott that the company shares only the general outlines of the program with other companies and keep the details proprietary. And success in the Pathways to Independence program has encouraged Marriott to undertake other initiatives such as the Associate Resource Line, a hot line that provides assistance with housing, transportation, immigration, financial and legal issues, and even pet care. It cost Marriott $2 million to set up the hot line; it now saves $4 for every dollar spent, through lower turnover and reduced absenteeism".

Case 3:   United Airlines’s HR Innovations and Community Involvement Programme

United Airlines is yet another example of a community involvement programme which allowed the testing of some innovative HR practices. Its leading role in the Welfare-to-Work Partnership⁹ has enabled United Airlines to create human resources innovations, such as a new mentoring programme, which United plans to use for its more than 10,000 new recruits (Kanter, 1999).

These examples taken from Kanter (1999) show new ways in which business can address social issues. These `high-impact’ business contributions to the community are made by enterprises that go beyond traditional charity and public relations campaigns, but identify and use "the core competencies of business- the things it does best. For Bell Atlantic, it is communications technology....for Marriott, it is service strategies. In this new paradigm, the activities are focussed on results, seeking measurable outcomes and demonstrated changes. The effort can be sustained and replicated in other places. The community gets new approaches that build capabilities and point the way to permanent improvements. The business gets bottom-line benefits : new products, new solutions to critical problems, and new market opportunities" (Kanter, 1999, pp. 132).

2.2.5 Case Studies Involving the Participation of Community Leaders in Decisions Regarding the Introduction of Community Involvement Programmes

Obvious budgetary constraints dictate the necessity to invest only in programmes which are most beneficial to the community and the enterprise. The choice of community programme should be a joint decision made by community leaders and other stakeholders, and the enterprise itself. Such an approach would take into account both community concerns and the enterprise’s business objectives.¹⁰

Case 1: North West Water (NWW)

This British company recently came up with a new community involvement policy This case is an example of how stakeholders’ demands influence corporate community-related activities (Gribben et al., 1998).

It is also an example of a strategic approach to community involvement programmes, since its alignment with business objectives is ensured.

NWW has four business strategic objectives: customer satisfaction, people satisfaction, business results and the impact on society. The impact on society objective is defined in the following way : "We will protect and enhance public health, safety and the environment, and meet community expectations of us as a business leader in the North West of England" (Gribben et al., 1998).

As a preliminary step and in order to meet community expectations, NWW launched a survey between June and September 1996 that sought the views of 875 community leaders and other stakeholders on what the community expects of it. Then, the company’s existing contributions to the community were audited and its `best practices’ were reviewed. The experience of other companies was also studied.

As a result of these efforts, a revised policy was written which benefited from the alignment with business objectives, community opinion, a knowledge of best practices and a detailed understanding of its current actions (Gribben et al., 1998). The policy had an executive supervisor (the Quality Director) and a review group. The policy was approved in January 1997 and the whole approach is based on community partnership.

The core of this new policy is expressed in NWW’s Eight Community Commitments.

Box 2.3 NWW’s Eight Community Commitments

A. What We Do- Our Focus Areas :  Our community commitments cover four main areas of action : 1. Education 2. Environment 3. Enterprise skills and regional leadership 4. Extra needs -------------------------------------------------------------------- B. How We Do It : As we fulfil our community commitments, we behave in a responsible way, with commitments to :   5. Listen, consult and act 6. Being open 7. Employee involvement and community partnership -------------------------------------------------------------------- C. How You Can Judge Our Performance : To make sure the community can call us.   to account on our commitments, we also have a commitment to :     8.  Measure

The effectiveness of NWW’s approach to community involvement can be seen in the results of the 1997 survey of stakeholder opinions :

• 70 per cent of the community agree that NWW is meeting their expectations regarding the company’s social responsibility
• one in three was able to name a community initiative (Gribben et al., 1998).

Case 2: Newmont and Freeport in Indonesia

The Financial Times (June 1999) provides another case of community (stakeholders’) participation in an enterprise’s choice of specific community involvement programmes. This is an example from Indonesia, where Newmont, the US mining company, and Freeport, its largest competitor in the country have heavily invested in community involvement programmes. Newmont set up a new foundation which would enable it to have $ 500,000 a year at its disposal for community development projects. The financing decisions were made with the active involvement of local community representatives and were aimed at, among other things, housing projects and anti-malaria programmes. Freeport set aside 1 per cent of its revenues- roughly $ 15m in 1998- for community programmes targeted at indigenous tribes. It is spending a similar amount on health and education programmes (Thoenes, The Financial Times, June 1999).

3. Concluding Remarks and Some Preliminary Observations

3.1 What are the Factors which Explain the Success of Community Involvement Programmes?

The success of community involvement programmes depends on the enterprise’s external environment, but, more importantly on its business priorities, corporate culture, available budget, level of support from senior management, and any special characteristics which enable it to offer something valuable- perhaps unique- to the community.

The success of such programmes is also contingent on the enterprise’s ability to support them with a number of new or modified organizational mechanisms and practices. Introducing corporate codes of conduct or other similar policies and guidelines can be some of these supportive practices. Other measures include those related to HR issues (recruitment and selection, compensation and benefits, performance management, etc.) and accounting.

We would like to quote Altman (1998), who was able to derive the composite profile of a company with what she describes as "Transformed Corporate Community Relations (CCR)", i.e. a company which pioneers new approaches to corporate community relations (cited from Altman, 1998, pp. 17-18) :

• "An approach merging values and strategy. Companies that have been able to merge preexisting corporate ethics of strong community involvement with newer strategic linkages have a passion driving the work that is evident. The strategic component includes viewing community involvement as a "business imperative", and recognizing its business benefits.
• A belief that the corporation can only be successful if the community is. High performing companies noted a "symbiotic" relationship between firm success and community prosperity.
• High "intensity" levels. Intensity is the prioritization the company places on community involvement and the matching actions that back up that commitment. Examples include top executive spoken words and action (time), employee involvement and leadership, publication of actions, and sufficient resources (staff and volunteer) to match the high priority.
• High "integration" levels. Integration means community relations and contributions are administered jointly with complimentary goals; and community responsibility is woven throughout all operating divisions.
• Programmes that are responsive to community stakeholder. Firms are proactive, managers practice boundary spanning by having feelers out into the community. They sense issues of concern to employees, customers (and potential customers)  and community activist groups, and how these merge with those of interest to the company.
• A contingent approach to programme planning. Recognition that each locale and business group may require its own tailored set of programmes. Companies have a programme profile overseen centrally to insure consistency with strategic goals, yet varied and diverse to allow for local decision-making on issues of greater concern.
• Proficiency with change management. CCR managers are skilled  change agents and the organization is receptive to change around community and social issues.
• Supporting fewer activitie. Corporations have found they can impact more if they support fewer issues at an increased level.
• Actively partnering with non-profit organizations. Corporations are working with their supported agencies to mutually define goals, not just provide money. Some companies are seeking out agencies that can accomplish benefits in their chosen issue areas."

Of course, the examples presented here do not constitute an exhaustive list of "success stories". They were selected largely on account of the availability of case studies. We believe, however, that these case studies can be of use to enterprises in the process of formulating and implementing their community involvement programmes. The issue of transferability (of innovative practices) across boundaries- organizational, industry or national- cannot therefore be avoided here.

3.2 Cross-organizational Transfers of Innovative Practices

For a successful social practice (such as an effective community involvement programme) to be successful, and be a source of sustained competitive advantage, it should not only be valuable, but should also be imperfectly imitable (Barney, 1986). The transfer of a successful practice is often mitigated by the donor enterprise’s fear of losing its competitive advantage.¹¹  The Marriott International case discussed earlier, illustrates this point.

The success of cross-organizational transfers of practices depends also on the willingness and ability of an acceptor enterprise to successfully use them. This issue was recently studied within the framework of a new version of a resource-based view of the firm, called the `dynamic capabilities’ approach  (Teece at al., 1990). This approach stresses the importance of developing new capabilities as well as exploiting old ones. Unlike the traditional resource-based approach, it does not treat the enterprise only as a bundle of resources, but also in terms of the mechanisms by which it accumulates and dissipates new capabilities, and the forces which limit the rate and direction of this process.

The enterprise’s capabilities are developed through both internal and external learning. When it comes to inter-organizational transfers of knowledge, the acceptor enterprise faces two important questions :

1. Does it really have the desire to exploit external knowledge?

2. Does it have the capability of absorbing this knowledge?

It is quite natural for an enterprise to decide whether or not it has the desire to exploit a particular type of external knowledge.¹² The second question is more difficult to answer.

While each enterprise can learn something, quite often, it may not have the required potential to absorb all the knowledge it needs. The enterprise’s ability to absorb and exploit a particular type of knowledge depends on two factors :

• the complexity of the external knowledge;
• the enterprise’s internal ability to absorb such knowledge.

An enterprise’s ability to evaluate and utilize external knowledge is largely a function of three levels of its prior knowledge. This prior knowledge confers on the enterprise abilities to :

• recognize the value of new information;
• assimilate it;
• apply it to commercial ends.

These abilities collectively constitute what is known as an enterprise’s `absorptive capacity’. Cohen and Levinthal suggest that a firm’s "absorptive capacity is more likely to be developed and maintained as a byproduct of routine activity when the knowledge domain that the firm wishes to exploit is closely related to its current knowledge base. When, however, a firm wishes to acquire and use knowledge that is unrelated to its ongoing activity, then the firm must dedicate efforts exclusively to creating absorptive capacity (i.e., absorptive capacity is not a byproduct). In this case, absorptive capacity may not even occur to the firm as an investment alternative. Even if it does, due to the intangible nature of absorptive capacity, a firm may be reluctant to sacrifice current output... to acquire the requisite breadth of knowledge that would permit  absorption  of  knowledge from new domains"  (Cohen and Levinthal, 1990, pp.  145-150).

In the case of corporate community involvement programmes, an enterprise should have the capacity to absorb a particular initiative displayed by another enterprise. The success of the transfer would depend on the enterprise’s prior knowledge of the area and its readiness to invest in improvements in its social `absorptive capacity’, even, if necessary, at the expense of its short-term output.

Thus, other things being constant, a transfer is more successful if an acceptor enterprise absorbs practices which fit well into its core competencies, instead of blindly copying all `fashionable’ practices and approaches.

3.3   Cross-industry Transfers of Innovative Practices

The transfer of a particular practice across industry boundaries is not easy. A practice, pioneered for example, in the service industry, may not necessarily be appropriate for heavy industry. This applies not only to technology-related cross-industry differences, but also to the different levels of community involvement in different industries, which are dictated largely by differences in public expectations of the companies representing different sectors of the economy. Bendheim et al. (1998), for example, have shown that in general, enterprises in heavy industries, transportation and primary industries (such as extraction) display the poorest community relations. On the other hand, services, consumer products, and assembly rank the highest. These industries have arguably less of a direct negative impact on communities and have reason to be more proactive with respect to potential customers and employees within the communities in which they operate. "Services lead in their attention to communities, presumably because they require strong community support if they are to be successful due to the face-to-face elements involved in delivering effective services" (Bendheim et al., 1998, pp. 325).

3.4 Cross-national Transfers of Innovative Practices

The situation is even more complicated when it comes to the issue of transfers of certain practices across national borders. Just as countries learn from each other, enterprises often learn from foreign enterprises. This form of learning has a long history. When Britain began to challenge the preeminence of the textile industry of continental Europe, French and Belgian commissions went to the UK to study the new machines and factories there. When US exports shifted from whale oil to machinery, European visitors came to look at the "American System of Manufacturing" and meet Taylor and Ford (Kogut and Rogovsky, 1994). In recent years, Japan has been `invaded’ by groups of industrialists eager to learn the "Japanese System of  Management". These examples show that at particular periods in history, certain countries take the leadership in enterprise and employee management. As new and improved methods are introduced, these are diffused to other enterprises and countries. In this sense, the boundaries of enterprises are more permeable than those of nations; learning across enterprises can happen faster than learning across nations.

But over time, new methods and practices  cross national borders. In this process, methods are altered and transformed to suit national conditions. The key to the success of transfers is the ability of agents of transfers to adjust particular practices to local conditions.

It has been shown empirically that the failure or success of the transfer of a particular organizational practice, such as a specific type of community involvement programme across borders is mediated by cross-country differences in :

• the business structure (Schuler, Dowling and DeCieri, 1994; Pieper, 1991)
• the legislative and employment relationship context (Florkowski and Schuler, 1994)
• the patterns of organizational competence and decision-making (Sparrow, Schuler and Jackson, 1994)
• the national culture (Hofstede, 1984; Trompenaars and Hampden-Turner, 1998; Schuler and Rogovsky, 1998).

These factors should be taken into consideration regardless of whether one is referring to a transfer through the internal channels of a multinational enterprise, or a transfer across organizational and national borders simultaneously, i.e., emulation.

3.5  The Role of Governments and Employers’ Organizations

The programmes discussed in this paper are completely voluntary and based on the consent of key stakeholders and corporate social concerns. However, governments and employers’ organizations can play an important role in promoting the diffusion  and transfer of  innovative and successful organizational practices.

The Financial Times (June 1999) gives an example of government involvement in promoting corporate community programmes. The British government set up a resource centre in May 1999 to be run by a consortium led by the Prince of Wales Business Leaders’ Forum to help business, trade unions and non-governmental organizations form partnerships to "implement socially responsible practices, monitor their impact and undertake social auditing" (The Financial Times, June 1999).

Three British government departments- the Foreign Office, the Department for International Development and the Department of Trade and Industry- have all set up or expanded sections devoted to promoting corporate citizenship and community involvement.

Many governments in developing countries are establishing laws and regulations that encourage foreign investors to pursue community involvement programmes in their countries. For example, "Indonesia’s government is introducing new requirements on mining companies to invest in the local community" (The Financial Times, June 1999).

Governments of host countries could encourage multinational investors to transfer successful social practices they use elsewhere to their countries. The transfer of innovative practices through the internal channels of  multinational companies is likely to be more effective than emulation, since such internal transfers eliminate the potential problem of `absorptive capacity’, which often surfaces in the case of emulation. This is especially important when corporate community involvement programmes are directly related to an enterprise’s core competencies, as in the cases of Bell Atlantic and Marriott International.

The role of employers’ organizations is another important element in the institutional environment for business. Employers’ organizations are influential organized actors of civil society. Their position in society is undergoing a significant transformation in parallel with the changing role of business. They provide an important, consolidated institutional channel through which the interests of business and society are mediated. They also provide a natural platform for  dialogue between enterprises, as also between enterprises and other groups of society. Employers’ organizations could play a potentially significant role in spreading innovative social practices within the business community, and thereby promote greater positive interaction between business and society. By strengthening and broadening their intermediary role, employers’ organizations could help to reinforce the contribution of business to sustainable development and prosperity.

^* Nikolai Rogovsky is a Senior Research Officer at the International Institute for Labour Studies, ILO, Geneva

4.   NOTES

¹ Lack of data precludes the identification of  `country-specific’ models of community involvement activities. Whether such specificity exists or not is an issue for future research.

² It is not always easy to separate a local community from the community at large. One can therefore talk of business community involvement programmes, where a community is simply defined as a place where an enterprise operates. Thus, based on this definition,  community for a multinational enterprise can range from a small village to the whole world.

³ The Center for Corporate Community Relations at Boston College, Carroll School of Management, is a technical assistance and umbrella professional organization with over 300 corporate members.

⁴ Here and elsewhere, source of information is : http://www.ebnsc.org.

⁵ Enterprise choice between individual programmes and multiple enterprise partnerships is one of the questions that future research should answer.

⁶ A good reputation mostly influences consumer preferences. Several European studies have shown that almost 90 per cent of consumers are more likely to buy a product associated with a good cause, other things held constant. A similar US survey found that more than three-quarters of consumers would be likely to switch to brands and/or retailers associated with a good cause and would be prepared to pay a dollar more on a $ 20 item for a guarantee than it came from a worker-friendly supplier (CSR Magazine, 1999; The Financial Times, 1999). Thus, community involvement programmes could be viewed as a source of competitive advantage even if they only contribute to better corporate reputation. However, if community involvement programmes capitalize on an enterprise’s core competencies, the enterprise can enjoy more benefits, directly related to its development of new products, organizational practices, expanding clientele, etc.

⁷ Here, `innovation policy’ is defined in a broader sense than just `R&D policy’. It includes, for example, HR and other organizational innovations.

⁸ Here, and throughout this case, italics in citation - NR.

⁹ A US nation-wide coalition of 8,000 businesses  that have pledged to hire people off the welfare rolls.

¹⁰ When we say `business objectives’ here, we do not necessarily mean contribution to an enterprise’s core competencies. Enterprise business objectives could be related to an improved public image, or to better relationships with the government or community leaders.

¹¹ Therefore, an acceptor enterprise should be prepared to apply creativity in putting a transferred practice within its organizational context to compensate for the part of `know-how’ which a donor enterprise is unwilling to share.

¹² In practice however, this is often not an easy question to answer.

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