36.4 Case Study of the Development of CSR in Danfoss

Rufei Ma , Aalborg University, Aalborg, Denmark
ImnLin Toh , Aalborg University, Aalborg, Denmark
Per Christensen , Aalborg University, Aalborg, Denmark
Martin Lehmann , Department of Development and Planning, Aalborg University, Aalborg East, Denmark

Corporations have come a long way from the standard financial accounting that businesses of yesteryears are used to. They are now very much aware of the need that they should also build strong public profiles and the common approach is to maintain a balance between maintaining financial stability and engaging in socially responsible activities. Corporations know they cannot simply disengage themselves from the community it is located in. As businesses become progressively more global, interactions with civil society, become increasingly broader in context. This is especially so for multi-national corporations; in which their activities, more often than not, transcends geographical boundaries and are inevitably also under international scrutiny.

This paper focuses on the CSR practice within Danfoss Group, a leading global manufacturing company based in Denmark. The private company which in 1933 started out from the attic of Mads Clausen's parents' house in Nordborg has expanded hundred-folds and it is now a global manufacturing company with over 70 factories in various locations in about 25 countries. It is also currently employing approximately 22,000 people worldwide. Additionally, Danfoss Group's products are sold and serviced internationally by a network of 115 sales companies. The expansion of Danfoss Group to other countries, as far as Asia and South America, provides an idea of the magnitude of the number of communities that Danfoss may or may not affect.

Its mechanism in CSR policy making and its learning capacity in reaction to changes that may be caused by major events (climate change and current financial crisis) and its global expansion to other countries (globalization), are central in our discussion.

As a Denmark-based company, Danfoss enjoys a comparatively more conducive socio-political environment for the development of ideas such as CSR, than developing countries such as those in Asia. The relatively strong political environment in Denmark further encourages stability in its economy and social environments. As a result, Danish companies have always been the front runners in the development of CSR practices. They were amongst the firsts to have collaborated with academia in the experimentation of ethical accounting (Giversen 2003); Sparekassen Nordjylland published the first of such social reports in 1989. Most Danish corporations are also following international CSR reporting guidelines such as the UN Global Compact or GRI Reporting Guidelines. Thus, an investigation on the integration of CSR and also how CSR is implemented in a particular Danish company could be interesting.

Based on the premises of Institutional (e.g Scott, 2001), Organizational Change (Pettigrew & Whipp, 1991) and Stakeholder (e.g. Carroll 2003) theories, a case study investigation was carried out. Information was gathered from the available reports and the accessible online materials, through face-to-face interviews and questionnaire surveys with those at management level and also to the general employees.

Using the study of Chappel and Moon (2005) as a point of departure, the CSR activities are referred to as CSR Waves, to which they reflect the alignment of CSR to the core business of the specific corporation. The three waves are categorised as Community Involvement (1st Stage), socially responsible Products and Processes (2nd Stage) and lastly socially responsible Employee Relations (3rd Stage). The methods with which the company employs to build their CSR activities are referred to as CSR Modes. These CSR Modes can provide an idea on the extent of institutionalisation of CSR in the company. The traditional way of making mere philanthropic contributions are considered the least institutionalised Mode, as compared to other Modes such as engaging in partnerships, sponsoring, adopting CSR codes and encouraging employee participation in CSR activities.

With this as reference, and also from the empirical findings, it is possible to investigate and determine the CSR Wave at which Danfoss Group is practising CSR. The CSR waves and corresponding modes are also identified to illustrate the progression of CSR in Danfoss Group, whilst gaining insights as to how it reacts to major events and the changes it goes through as well as its learning process. We could then identify the most significant theme of events (climate change, economics, or any other) which play the major role in shaping the development of CSR to what it currently is within Danfoss Group.

Keywords: CSR, Climate, Change, Financial Crisis, Globalization, Competitive Advantage

References:

Carroll, Archie B. 2003. Business and Society: Ethics and Stakeholder Management. USA: South-Western College Publications.

Chappel, Wendy and Moon, Jeremy. 2005. Corporate Social Responsibility (CSR) in Asia: A Seven-Country Study of CSR Website Reporting. Business Society 2005; 44; 415. Sage Publications.

Giversen, Jørgen. 2003. The World's First Ethical Accounting Statement. In Corporate Values and Responsibility: The Case of Denmark, 1st ed., eds. Morsing and Thyssen. p.33–41. Copenhagen: Samfundslitteratur.

Pettigrew, Andrew and Whipp, Richard. 1991. Managing Change for Competitive Success. Oxford: Blackwell Publishers.

Scott, Richard W. 2001. Institutions and Organizations. 2nd edn. Thousand Oaks, CA: Sage Publications.