ABSTRACT. In this paper a corporate social respon-sibility audit is developed following the underlyingmethodology of the quality award/excellence models.Firstly the extent to which the quality awards alreadyincorporate the development of social responsibilityis examined by looking at the Malcolm BaldrigeNational Quality Award and the European QualityAward. It will be shown that the quality awards donot yet include ethical aspects in relation to socialresponsibility. Both a clear definition of social respon-sibility and an improved audit instrument are required.A definition and an audit instrument are developedwhich stimulate movement in that direction and helporganisations to reflect on their position in relation tosocial responsibility.

KEY WORDS: audit, business ethics, self-assessment,social responsibility, total quality management

Introduction

Business ethics and social responsibility arethemes that are given considerable attention incompanies as well as in academic journals(Weaver et al., 1999; Mackenzie, 1998; Nitkinand Brooks, 1998; Maurey et al., 1999; Tayloret al., 1999; Daisuke, 1999). Employees, cus-tomers, suppliers, competitors, and governmentare all placing increasing demands on manage-ment. Expectations of stakeholders not onlyrelate to the direct transactions between parties,they now expect management to participate inthe debate on societal problems (e.g. unemploy-ment, poverty, infrastructure) and proactivelythink about the effects of the business on societyat large.

This growing attention to ethics fits well inthe evolution of thinking on quality, although

not yet incorporated into the current models aswill be discussed later. Garvin (1988) describeshow the ideas about the scope of quality havechanged in management thinking during the lastcentury. In the first stage of the evolution ofquality thinking, quality has been relatedprimarily to the products or services, and theperformances of those products and services. Inthe second stage of the evolution the view onquality was broadened to the processes by whichthe products and services were manufactured.Thus the focus shifted from the end of theproduction line to the process. The third stagewas again a broadening of the focus from processto system. It was recognised that not only theprimary production process influences the per-formances of the end product; the supporting,supplying, and management processes also act onthat primary process and contribute to theproducts and services. The focus became thequality of the system. The fourth stage can bedefined as the Total Quality Management (TQM)stage, where quality has become a more strategicissue and the focus is broadened towards thequality of the organisation and the quality of theorganisation’s relationships with its environment(customers, suppliers, competitors, society atlarge).

The issue of business ethics and social respon-sibility is thus becoming a theme for organisa-tions which are serious in their approach towardsbusiness excellence (Fisscher, 1994; Buban, 1995;Nakano, 1999). However, it will be shown in thispaper that ethics and social responsibility are notincorporated in the excellence models whichhave been developed for the Malcolm BaldrigeNational Quality Award (MBNQA) and theEuropean Quality Award (EQA). The focus of

A Corporate Social Responsibility Audit within a Quality Management Framework

Journal of Business Ethics 31: 285–297, 2001.© 2001 Kluwer Academic Publishers. Printed in the Netherlands.

Peter KokTon van der WieleRichard McKenna

Alan Brown

this paper will be to define how business ethicsand social responsibility can be included in thegeneral self-audit/self-assessment approachescompanies are using against one of the models ofexcellence.

Ethics bases to define what is right

Ethics is defined by Stahl and Grigsby (1997) asdoing the right thing right the first time. Somepeople are morally autonomous and alwaysbehave in a manner considered right by the widersociety. Others obey a code of ethical conduct,or standard, because they believe it is the rightthing to do or because they are required to.However, what is the right thing for one personor group, might not be the right thing for others.A quality management framework should requireconsistency in ethical behaviour throughout theorganisation. Different ethics bases and differentapproaches can be used to evaluate what is rightand what is wrong. Five legitimate ethics baseshave been identified within the standardsapproach (McKenna, 1999; Shaw, 1996):

• Eternal law: This ethics base presumes thatthere is a common set of moral standards (e.g.Nature or Holy Scripture), which offer a setof general rules for everyone to follow (rulebased ethics); The problem with this point ofview, of course, is that the interpretation ofthe common set of standards, and its transla-tion into rules, will apparently differ for manypeople;

• Utilitarianism: The utilitarian principle meansthat managers should act in ways to create thegreatest benefits for the largest number ofpeople; the focus is on the outcome, not onthe intent, of management behaviour.Problems with this ethics base are related todefining which groups have to be involved,defining the largest number of people whobenefit from decisions, and the ignoring ofharm that may be done through the meansused to achieve the ends;

• Universalism (categorical imperative): Thisethics base finds the ethics of a decisiondepending on the motives or intentions of the

decision-maker, which can be related to thecontractual arrangements and obligations ofthe decision-maker. Each moral person giveshimself or herself the moral law based onreason, and it is the same moral law for allpersons. The problem with this ethics base isthat there is no clear indication of how weshould choose between conflicting obligationsor duties;

• Distributive justice: According to this idea,managers should act to ensure a more equi-table distribution of benefits. Self-interest istempered by individual concern for thedisadvantaged. Problems with this approach arethat it does not recognise that inequalities canbe transmitted between generations and that itdoes not define the ratio to which thingsshould be made more equal;

• Personal liberty: This view is based on theprimacy of the single value of liberty;Managerial decisions should not violate theindividual right to be free of coercion; Theproblem here is that it ignores environmentalfactors such as chaos and change which mayfavour some individuals and not others,thereby enabling some to receive a far greatershare of benefits, or burdens.

Each of the five ethics bases can be identified asthe right one, and at the same time there willbe conflicts between them. Herein lies theproblem for managers, which ethics bases tochose, or how to balance the different ethicsbases that are all in the game? Each of thesetheories is goal oriented, implying that managerscontrol the ethics of their organisations andemployees. An alternative perspective (the virtuesmodel) sees ethics as primarily an individual issueand requires managers to manage ethically(Brewer, 1997; MacIntyre, 1985; Preston 1996;Shaw, 1996; Singer, 1993), and to allow theiremployees scope for moral autonomy. Respect,honesty, fairness are seen as virtues; greed is not.While a virtue/moral autonomy approach maybe satisfactory or preferred, the quality manage-ment framework inherently prefers a standardsapproach.

286 Peter Kok et al.

Corporate social responsibility

It was Friedman (1962, p. 133) who started thediscussion on the issue of social responsibility;should companies take responsibility for socialissues? and are companies able to take on thisresponsibility? His point of view is quite clear.Let business people do what they have to do, andthat is taking care of their business. Accordingto Friedman there is only one type of socialresponsibility: using resources and engaging inactivities designed to increase profits so long asit stays within the rules that have been defined.Here it seems that managers are required onlyto use economic and legal analysis, and not ethicsanalysis, in making decisions. Critics of this viewargue that a business must consider the long-range social costs of its activities as well as itsprofits (Shaw and Barry, 1992, p. 213). Thejustification for the existence of any corporationis that it serves its purpose: to benefit society.

Mintzberg (1983) shows, with his horse shoemodel, that there are many options to look atcompanies (e.g. nationalise it, democratise it, regulateit, pressure it, trust it, ignore it, induce it, restore it).Mintzberg’s conclusion is that we start with thepremise that managers will take at least somesocial responsibility into account by makingdecisions, because they are members of thesociety themselves. However, trusting managersis not always enough. Two power sources can beused to force managers to take more socialresponsibility into account. First, some pressurecan be used, for example through pressuregroups, actions and campaigns, to bring respon-sibilities under the attention of managers and toshow the consequences of unethical behaviour.Second, the organisation can be democratised, byopening and involving various stakeholders, likecustomers, employees, suppliers, and peopleliving around the organisation. Mintzberg (1983)sees the subject of social responsibility from thepoint of view of the society. How is societythinking about the role of the company inrelation to social responsibility. This is a politicsmodel. The institution of business is society’sprinciple mechanism for producing and distrib-uting economic goods. Therefore the purposeof a business organisation must be to deliver

economic and ethical performance to society(Sherwin, 1983, p. 185). How it should do thisdepends on its particular circumstances, thenature of the good, structure of the industry,location, and organisational specifics. We canlook at these influences at two levels: the organ-isation itself, and the environment of its domain.The latter involves examination of an organisa-tion’s relationships with its various stakeholders.

Looking at social responsibility from the pointof view of the company, there are at least threelevels of corporate social responsibilities asdefined by Stahl and Grigsby (1997). Thesepositions are:

• Minimum legal compliance: Managers complywith the minimum social requirements of thelaw;

• Enlightened self-interest: Managers use socialresponsibility programs as a strategic weaponto communicate to the market that they arebetter than their competitors; The interest insocial responsibility is expected to give long-term profitability;

• Proactive change: Managers uses its assetsactively to improve society independent of adirect benefit to the firm; they are takingpositions far beyond the requirements of thelaw.

The definition we will use for corporate respon-sibility fits this latter proactive change position:Corporate social responsibility is the obligation of thefirm to use its resources in ways to benefit society,through committed participation as a member of society,taking into account the society at large, and improvingwelfare of society at large independently of direct gainsof the company. The three positions identified forthe social responsibility of a company parallelthree forms of ethics evident in organisations(Brand, 1989):

• Transaction ethics: This type of ethics illus-trates the lowest acceptable policy; aimed atreaching ones own goals and controllingconflicts for your own sake; sometimes thereis cooperation with others, because that willbenefit both parties; the focus is on your ownrights; This type can easily be linked with anapproach of the company in which the societyat large is not taken into account;

A Corporate Social Responsibility Audit within a Quality Management Framework 287

• Recognition ethics: This type of ethics showsthe balance between rights and obligations;aimed at serving general rights and theassurance of general welfare; The companywill take society at large into account,however, is not aimed at improving the welfareof the society at large;

• Change ethics: This type can be seen as theupper limit of ethics policy; the norms andvalues of society at large form the core of theethical approach and beliefs; it is not a matterof rights and duties, the values are acceptedvoluntarily; there is a participation in thedevelopment and innovation of the norms andvalues into new areas; The company takessociety at large into account, and aims atimproving welfare for the society at large.

It will be clear that the corporate social respon-sibility, according to our definition, needs thislatter type of ethics to be used in corporatepolicy and decision making. In fact, organiza-tional values must be subject to the externalmoral order (Golembiewski, 1965, p. 92) and not“the sole and final arbiter of behaviour”(Golembiewski, 1965, p. 73). It will also be clearthat managers will have difficulties in goingthrough all the ethics bases and evaluating normsand values for the society at large. One way tosolve those difficulties would be to ensurethrough selection and training that all organisa-tional members are morally autonomous (seebelow). Another way is by analysing the issuesinvolved through an ethical discussion in a“public debate” (Brand, 1989). Every represen-tative of the ethical bases outlined above, willhave the opportunity to demonstrate its normsand values, and interpretations and translationsinto concrete themes, which will differ for thevarious groups, based on historical, religious,nationality backgrounds. The broadest “publicdebate” would be:

– open: nobody is excluded from the discussion;– rational: there is no other power base in the

discussion then the better argument; – equal: everybody’s rights or concerns are

taking into account in an equal way.

Brand (1989) is clear about the goals of thepublic debate. It is not the intention to discuss

ad hoc situations or incidents, but it should be afundamental debate that has its focus on longer-term goals, defining the balances between thedifferent perspectives coming from the variousethics bases, and coming from the variousparticipants. The public debate will result inethical codes, which are guidelines for managersin making future decisions. The broader anddeeper the social responsibility, the more partic-ipants are invited to join the debate, and themore ethical subjects will be discussed. Thepublic debate is something that can be formallyorganised and linked to the organisational systemsand structures. The fundamental public debateis a concept that can be compared with thefourth generation evaluation of Guba andLincoln (1989). In that fourth generation evalu-ation as many participants or parties as possibleare invited to participate in the evaluation anddecision making.

Quality awards, models of excellence andsocial responsibility

Quality awards have been developed in manycountries and regions. The oldest and most wellknown is the Deming Award, created in Japanin 1951. It took quite a long time before theWest followed: Australian Quality Award (1986),Malcolm Baldrige National Quality Award in theU.S.A. (1987), European Quality Award (1992).In Europe there are also national quality awardsin many countries. Additionally there are inter-national and national standards covering variousaspects of corporate performance (e.g. ISO14000 for care of the environment).

All these awards have been developed in orderto stimulate companies to pay more attention toquality management and to get quality manage-ment issues on the agenda of top management.This goal has certainly been reached. The awardsare given to companies which score high oncriteria which have been defined for the selec-tion, and it is these criteria which have given adefinition of what quality management means inmanagement terms. The model of Excellencecovering those criteria is different for the variousawards, however, there is a general framework

288 Peter Kok et al.

underlying all the excellence models of theawards. In Figure 1 the Excellence model of theEuropean Quality Award (EQA) is shown.

The model of the EQA was the first model,which explicitly shows that social responsibilityis strongly related to the quality thinking. Aseparate category is defined towards this issue inthe excellence model. The model consists ofnine categories: Leadership, Policy & Strategy,People Management, Resource Management,Management of Processes, Employee Satisfaction,Customer Satisfaction, Impact on Society, andBusiness Results. Each of the nine categoriescovers a number of criteria (4–5 criteria in eachcategory), and each criterion has subcriteria.Altogether the criteria define what quality man-agement means for managing an organisation, interms which are easily accepted by managers,because the overall model is a simple input –throughput – output model.

The fact that the excellence models give acomprehensive definition of the meaning ofquality management, has stimulated the use ofthese models not only for applying for an award,but for internal self-assessments to monitor andguide the organisation in its quality managementimplementation. So, although the number ofapplicants for an award is very low, the impor-tance of the excellence models is built on thewidely accepted use of it as an internal device forself-assessment.

The two excellence models which have beenstudied in more depth in relation to social

responsibility are the MBNQA and the EQA.Three questions are defined that are importantfor measuring the extent to which each of theseawards pay attention and give direction to socialresponsibility issues (Brand, 1989). These threequestions are:

1. Does the model demand a clear missionstatement of the organisation? The mission statement should give indicationsof the overall goal of the organisation ineconomic as well as in social terms, and howthese are translated into strategies within thevalues and norms as defined by the organisa-tion. Within this framework the organisationshould be stimulated to recognise the needsof all stakeholder groups and to make clearwhat its position is in relation to socialresponsibility.

2. Does the model demand the organisation tobe clear about the public debate? Is the mission statement reviewed and evalu-ated regularly in a public debate, where allrelevant participants can join and where allrelevant issues can be discussed? Informationon the public debate should give answers toquestions like: – are only the formal and legal issues treated

as important (transaction ethics)? – are only those people or parties involved

with whom we can make deals that con-tribute directly to the business performance(recognition ethics)?

A Corporate Social Responsibility Audit within a Quality Management Framework 289

Figure 1. The EQA excellence model.

– are only that issues discussed which are ofdirect importance for the business perfor-mance (recognition ethics)?

– is the public debate broad (open in partic-ipation and open in issues that are dis-cussed) and does the organisationcontribute through its resources to thatdebate (change ethics)?

3. Does the model demand ethical codes? The outcome of the public debate should leadto either a statement of virtues and guide-lines for living them or ethical codes, whichare the more specific norms of behaviour,which will influence the strategies and theoverall mission.

These three criteria will be used to analyse therole of social responsibility within the excellencemodels of the MBNQA (NIST, 1996) and theEQA (EFQM, 1999). Mission, Public Debate,and Ethical Codes together form a loop throughwhich each of the three is continuously reviewedand improved.

Table I the two excellence models against the

three core issues: mission statement, publicdebate, and ethical codes. Although some of thecategories and criteria of the models mentionlinks with social responsibility and business ethics,the general conclusion must be that the ethicsparadigm which is stimulated through the modeland its criteria, is mainly related to compliancewith legal demands (transaction ethics), and insome cases showing some tendencies towardsenlightened self-interest (recognition ethics).

Based on the analysis of the criteria of thetwo models the EQA might be closer towardsrecognition ethics, while the MBNQA is closertowards transaction ethics. The MBNQA criteriaare mainly related to transaction ethics, wherein a very restricted way also the customer needsare taken into account. The EQA criteria arefocused on the needs of all stakeholders, however,only as far as there is a direct relation with theeconomic responsibility of the organisation. Themodels do not stimulate or demand a positionthat is more in line with change ethics andproactive change in relation to social responsi-bility.

290 Peter Kok et al.

TABLE IComparison of EQA and MBNQA models in relation to social responsibility

MBNQA criteria EQA criteria

Mission: • focus on key-stakeholders • focus on key-stakeholders• focus on quality principles and • strongly focused on economic goals

economic values • business results strongly financial • only very few attention to social oriented

responsibility and ethical values• no attention to codes of behaviour

Public debate: • restricted to key-stakeholders • strong focus on participants which • only issues in relation to quality values have direct influence on business • only very few attention to ethical values results• business results strongly focussed on • subjects should have a direct link

financial results with bottom line of organisation

Ethical codes: • no explicit attention to codes of • no explicit attention to codes of behaviour and ethical codes behaviour and ethical codes

Ethics type: • transaction ethics with tendency • recognition ethics with tendency towards recognition ethics towards transaction ethics

Responsibility: • minimum legal compliance position • enlightened self-interest position with tendency towards self-interest with tendency towards minimum position legal compliance position

Assessment of social responsibility

An assessment might be defined in the same wayas an audit. However, in the area of qualitymanagement these are seen as two differentthemes. An audit is quite often related to stan-dards with which the organisation has to be incompliance. You have to comply with theminimal norm that is defined by the standard,and have to take care that the organisation staysat that level. An assessment is quite often relatedto a review of the strengths and weaknesses ofthe organisation and aimed at defining opportu-nities for improvement. The assessment instru-ment might give an ideal model or level to aimat, giving direction for further change.

For the social audit the definition of an assess-ment would fit much best. The social audits areaccording to Poe (1994) “reportcards on thecompany’s social consciousness”, or as Vinten(1990) suggests “a review to ensure that anorganisation gives due consideration to its widerand social responsibilities to those both directlyand indirectly affected by its decisions, and thata balance is achieved in its corporate planningbetween these aspects and the more traditionalbusiness related objectives”. The reasons to usea social audit can be summarised in the followingways (Humble, 1975):

1. As part of the strategic and operationalplanning process, to review the existingpractices with regard to social responsibility,internal and external.

2. To define strengths and weaknesses instrategy and in practices.

3. In relation to the development of animprovement plan.

4. To measure progress in relation to theefforts undertaken to the implementationof social responsibility in the organisation

5. To obtain the participation of people whoare able to contribute to developing socialresponsibility.

Humble (1975) and Certo (1993) define theissues which are important in relation to socialresponsibility, although both do not give explicitattention to ethics in the context of training andcommunication or in relationships with suppliers.

However, building a healthy ethical climatethrough training and communication are themost important change processes. That is thereason two additional aspects (Supplier relations,and Ethics awareness) have been added. Relationswith suppliers is an important aspect of qualitycontrol and often there is an ethical aspect tothe relationships. This is best understood throughthe asymmetry of power evident in Porter’s(1980) model of competitive strategy. Wheresupplier power is relatively weak there is aresponsibility for the buying organisation to applyethical principles when negotiating matters suchas price, continuity of supply, design, changes inspecifications and so on. Awareness of the needto avoid abuse of a weaker partner is just oneaspect of a more general ethical awareness thatcan be achieved through selection and trainingof personnel. Ethical awareness of individualorganisational members is an aspect of theorganisation’s ethical climate. Ethical awarenessrequires organisational members who are morallyautonomous or morally heteronomous and anethical climate and/or strong codes of conduct.Moral autonomy is the capacity individualspossess to own their moral values and apply themin decision making with ethical implications,while heteronomy occurs when the moral lawsare taken from sources other than the self(Tsahuridu and McKenna, 2000) – in this casefrom a code of conduct or the ethical climate ofthe organisation. The fourteen aspects givepractical meaning to the concept of socialresponsibility. These aspects are summarised inTable II.

For each of the fourteen aspects of socialresponsibility a measure of how well each of theaspects is developed in the organisation can bemade. The scoring of the social responsibilityaspects, which is defined, follows in general termthe EQA scoring methodology. The scoring ofthe aspects in the social responsibility auditinstrument has four levels:

– Level 1 is related to ad hoc policy: In fact there is no policy. Social issues areneglected by management, except when thecosts of neglecting these social issues becomea problem. Also legal action might force the

A Corporate Social Responsibility Audit within a Quality Management Framework 291

organisation to pay attention to social issues.At this level there is no ethics awareness at all.

– Level 2 is related to a standard policy: The organisation follows the law regardingsocial issues. Only social issues that are made

compulsory through law are integrated intothe policies of the organisation.

– Level 3 is related to planned policy: Not only is the law followed by the company,also attention is given to other needs from

292 Peter Kok et al.

TABLE IIAspects of social responsibility

External environment:

01. Social responsibility and Contributing to solving or reducing social problems new opportunities:

02. Community relations: Extent of openness and support to people around the organisation and to (local or national) government, stakeholder groups, action groups, churches,educational institutes, health care institutes, and others.

03. Consumer relations: Extent of openness towards consumers; recognition of rights of consumers: safety, information, free choice, and to be listened.

04. Supplier relations: Extent of openness towards suppliers; recognition of rights of suppliers: information, participation in design.

05. Natural environment Execution of legal requirements, research into current and future technical (e.g. pollution and and environmental developments, environmental issues regarding packaging packaging) and future (recycling). Respect for biodiversity and needs of future generations.generations:

06. Shareholders relations: Extent of openness regarding social effects of the activities of the organisation(especially with regard to investment decisions).

Internal environment:

07. Physical environment: Safety, health, ergonomic aspects, structure and culture.

08. Working conditions: Demands in relation to recruitment, selection, promotion, part-time work, working on Sundays, medical aspects, retirement aspects.

09. Minorities/diversity: Extent to which attention is given to minorities, diversity, multiculturalism.

10. Organisational structure Empowerment, involvement. and management style:

11. Communication and Top down and bottom up communication, use of information technology,transparency: review of information flows: relevance, timeliness, detail, accuracy.

12. Industrial relations: Extent to which communication takes place about expectations, needs, valuesand norms in society.

13. Education and training: Needs of employees, current and future knowledge and skills, review of trainingbudget, personal development, quality assurance of training process, evaluation of training results.

Internally and externally:

14. Ethics awareness: Attention within development and training and communication for ethical subjects and aspects in relation to work and the business; involvement of employees in developing codes of behaviour, values, ethical codes, and the wayemployees are addressed to those aspects; stimulation of broad ethical discussion with all parties.

society. There is no deep understanding anddevelopment of the company’s own socialresponsibility with participation of all partiesinvolved. Only those parties which have socialclaims that directly relate to the businessperformance are involved in the discussion.

– Level 4 is related to an evaluated and reviewedpolicy: There is a broad and ongoing reflection on theactivities and effects of the organisation onsociety at large. All parties are involved indecision making on social responsibility issues.Priorities are defined, integrated into policies,and reviewed. The organisation uses itsresources in relation to societal problems,without the need for a direct relationship withbusiness performances. The organisation’sethical view is `the legal and moral justifica-tion for the existence of any corporation isthat it benefits society’ (Ostapski and Isaacs,1993). At this level much attention is giventowards the ethics awareness aspect, there is astructured approach in relation to developingan ethical climate through training and com-munication in the organisation.

Figure 2 illustrates the links between the issuesdiscussed above and the four levels of scoring theextent to which the corporate social responsi-bility aspects are developed in the organisation.The levels follow the same scoring methodologyas is used in assessing organisations against theexcellence models of the quality awards. At thehighest level there is a policy or plan, soundlybased on all relevant inputs; the plan is imple-mented throughout the organisation; measure-

ments are taking place in order to monitor theimplementation of the plan and the effects of it;and finally there is a regular review of the policy,in order to assess its strengths and weaknesses andto define opportunities for improvement.

A combination of the fourteen aspects of socialresponsibility and the four levels of scoring theextent to which the social responsibility policyhas been developed in the organisation gives theaudit instrument, in which for each of the aspectsnot only the current situation (the “ist” situa-tion), but also the future, more ideal, “soll”situation can be defined. Table III covers thesocial responsibility audit instrument.

The role of corporate social responsibilityin practice: Shell case

Although Shell never applied for a quality award,it is clear that it integrates many of the key prin-ciples of the quality management philosophy intoits policies and operations: customer focus, topmanagement involvement and commitment toaim for excellence, continuous improvement,managing by facts and people involvement. It hasalso been evident in recent history that Shell atleast has to pay attention to its social responsi-bility. So with this company it should be possibleto pilot the corporate social responsibility auditinstrument.

The information that is gathered in relation tothe social responsibility audit is based ondocuments (Shell, 1998) and on an interviewwith the manager of public affairs of Shell TheNetherlands BV. The manager public affairs

A Corporate Social Responsibility Audit within a Quality Management Framework 293

Figure 2. Ethics and policies.

294 Peter Kok et al.

TABLE IIIA corporate social responsibility audit instrument

Extent of Ad hoc policy Standard policy Planned policy Reviewed policystructuring: – costs – costs – costs – following law

– governmental – following law – following law – take in account needs pressure – no structured – take in of society, indepen-

ethics account needs dent of influence on approach of society business results

as far as – structured approach: influencing review and integrationbusiness results of social responsibility

– some structure aspectsin ethics – clear norms and valuesapproach – attention to develop-

ment ethical climate – developing ethical

codes – attention to organisa-

tional deployment

Aspects of social responsibility:

External environment:01. Social

responsibility and new opportunities – “soll” situation: – “ist” situation:

02. Community relations – “soll” situation: – “ist” situation:

3–12. . . .

13. Education and training – “soll” situation: – “ist” situation:

Internal and external:14. Ethics awareness

– “soll” situation: – “ist” situation:

reports directly to the CEO of Shell TheNetherlands, and advises top management ofShell companies in The Netherlands on socialissues which might have an effect on the businessresults. To do that, he has contacts with variousnon-governmental organisations and pressuregroups.

Shell recognises the conflicts that might occurbetween economic and social goals. Shell’s overallmessage is: “we hope, through this report andby our future actions, to show that the basicinterests of business and society are entirely com-patible – that there does not have to be a choicebetween profits and principles” (Shell, 1998,p. 3). However, it is also stated that: “answersare not always easy to find, but managers whorun a business in this uncertain world have nochoice but to make difficult decisions in the faceof complex dilemma’s” (Shell, 1998, p. 2).Because of the uncertainties and the boundedrationality there is a belief that Shell has tostimulate a broader debate around many issues.Even if you think you are right, that is not thesame as getting it right. The examples of theexecution of Ken Sro-Wiwa in Nigeria and theproblems around the Brentspar-platform havepushed Shell to a position of transformation, inwhich nothing is sacrosanct and fundamentals(e.g. way the business is done, quality of leader-ship, relationship with people, own vision of thefuture) can be questioned. As a follow up of thistransformation, discussions have started world-wide to explore its reputation, image and overallstanding and the stakeholder concept has beenredefined (Hummels, 1998). It all lead toredefining the Statement of General BusinessPrinciples, which had been in place and neverchanged for about 25 years (Herkstroter, 1998).

Within the General Business Principles fiveresponsibilities are defined: towards shareholders,to customers, to employees, to those with whomthey do business (including suppliers), and tosociety. The responsibility towards society isdescribed as: “to conduct business as responsiblecorporate members of society, to observe the lawsof the countries in which they operate, to expresssupport for fundamental human rights in linewith the legitimate role of business and to giveproper regard to health, safety and the environ-

ment consistent with their commitment to con-tribute to sustainable development” (Shell, 1998).

The General Business Principles, which canbe compared to the ethical codes, cover allfourteen aspects of social responsibility as definedin the audit instrument. The general policy ofShell is to contribute to social and materialprogress of countries in which they operatethrough performing their basic activities aseffectively as possible, and in addition to that bytaking a constructive interest in societal matterswhich may not be directly related to business(Shell, 1998). So, it can be summarised that thereis a serious policy about corporate social respon-sibility. First of all the law has to be followed, butabove that Shell wants to take into account thedemands of society in a broader sense. A directlink with business results is not a necessary con-dition to the company’s involvement in socialresponsibility areas. However, there will of coursealways be the conflict between business resultsand following the General Business Principles.

The implementation and integration of theGeneral Business Principles is not yet complete.Shell is searching for roadmaps to implement cor-porate social responsibility into its policies in astructured way. It has to become part of the Shellculture. Therefore, virtues must be defined andlived by top management and cascaded down toall employees, and standards and indicators haveto be developed in order to monitor the socialdimension of running the business. Relevantstandards and performance measures are maturein the financial area, are becoming established inthe area of health, safety and environment,however, are very fragmented and still inadequatein other social dimensions.

This brief case of Shell shows very clearly thatthe organisation is focusing on social responsi-bility issues in a very structured way, it is wellplanned and defined in the General BusinessPrinciples and in ethics codes, and considerableattention is given to review its policies and oper-ations within a broad discussion with manyparties. So, an assessment of the approach of Shellon corporate social responsibility would show alevel four on all fourteen social responsibilityaspects of the audit instrument. The informa-tion so far is not enough to assess the extent to

A Corporate Social Responsibility Audit within a Quality Management Framework 295

which the content of its social responsibilities areat the level of the “soll” situation. However, theapproach is in place and the deployment is onits way, so results should become visible in thenear future.

Conclusions

In this paper a corporate social responsibilityaudit is developed along the lines of the method-ology that is used in assessing a company againstone of the models of excellence which have beendeveloped for the quality awards. So far theexcellence models do not give much directionfor developing a more structured policy on socialresponsibility. The instrument developed coversa broad spectrum of social responsibility aspectsand each aspect can be assessed against the levelof structure in the policy that is in place. Theextent of structure of the approach is measuredfrom ad hoc, standard, planned, towards reviewedand evaluated. At the fourth level there shouldbe a clear policy on the social responsibilityaspects, based on broad discussions with allparties involved and about many social aspects.The policy is translated into ethics codes, imple-mented throughout the organisation, and evalu-ated and discussed, again in a broad publicdebate, leading to adjustments in the policy andethics codes.

The audit instrument should be used as a self-assessment instrument, to assist a company toreflect on its position in relation to its socialresponsibilities. The instrument focuses on theprocess and not on the content. However,through defining the aspects of social responsi-bility, which should be covered, it also providessome normative comment on the content.

The idea is to have the social responsibilityaudit integrated as much as possible into the self-assessment process against a model of excellence,which is used already in many companies.According to Power (1997) it should then bepossible to avoid “a multitude of unnecessary andconfusingly overlapping audits, which will lessthan optimally fulfil the needs of the variousstakeholders for whom the audits are intended”.

References

Brand, A. F.: 1989, Bedrijfsethiek in Nederland (BusinessEthics in The Netherlands) (Het Spectrum).

Brewer, K. B.: 1997, ‘Management as a Practice: AResponse to Alasdair MacIntyre’, Journal of BusinessEthics 16(8), 825–833.

Buban, M.: 1995, ‘Factoring Ethics into the TQMEquation’, Quality Progress 28(10), 97–99.

Certo, S. C.: 1993, Modern Management; Quality,Ethics, and the Global Environment (Allyn and Bacon,U.S.A.).

Daisuke, A.: 1999, Ethics Compliance ManagementSystems, Ethics Compliance Standard 2000(ECS2000), Business Ethics Research Project,Reitaku Centre for Economic Studies.

European Foundation for Quality Management: 1999,Assessing for Excellence – A Practical Guide for Self-Assessment (EFQM, Brussels).

Fisscher, O.: 1994, ‘Ethics and Social Value’, EuropeanQuality 1(4), 34–36.

Friedman, M.: 1962, Capitalism and Freedom(University of Chicago Press, Chicago).

Garvin, D. A.: 1988, Managing Quality, the Strategicand Competitive Edge (The Free Press, New York).

Golembiewski, R. T.: 1965, Men, Management, andMorality: Toward a New Organizational Ethic(McGraw-Hill, New York).

Golembiewski, R. T., R. B. Denhardt and J. D. Scott:1992, ‘Excerpts from “Organization as a MoralProblem’; Organization is a Moral Problem: Pastas Prelude to Present and Future; Morality as anOrganizational Problem’, Public AdministrationReview 52(2), 95–107.

Guba, E. G. and Y. S. Lincoln: 1989, Fourth GenerationEvaluation (Sage, California).

Herkstroter, C. A. J.: 1998, ‘Drie dimensies vanverantwoord ondernemen (Three Dimensions ofResponsible Management)’, Economische StatischeBerichten 83(4172), 772–775.

Humble, J.: 1975, The Responsible MultinationalEnterprise (Foundation for Business Responsi-bilities, London).

Hummels, H.: 1998, ’Organizing Ethics: AStakeholder Debate’, Journal of Business Ethics17(13), 1403–1419.

Kok, P. C.: 1999, Ethiek in bedrijf; een studie naar derol van maatschappelijke verantwoordelijkheid binnenTotal Quality Management (Ethics in Business; AStudy on the Role of Social Responsibility withinTQM) (Erasmus University, Rotterdam).

Mackenzie C.: 1998, ‘Ethical Auditing and Ethical

296 Peter Kok et al.

Knowledge’, Journal of Business Ethics 17(13),1395–1402.

MacIntyre, A.: 1985, After Virtue: A Study in MoralTheory (Duckworth, London).

MacKenna, R. J.: 1999, New Management (McGraw-Hill Australia, Rosewood).

Maurey, M. D. et al.: 1999, ‘Introduction to SpecialIssue: Promoting Business Ethics’, Journal ofBusiness Ethics 19(1), 1–2.

Mintzberg, H.: 1983, Power In and AroundOrganisations (Prentice-Hall, Englewood Cliffs).

Nakano, C.: 1999, ‘Attempting to InstitutionalizeEthics: Case Studies from Japan’, Journal of BusinessEthics 18(4), 335–343.

National Institute of Standards and Technology: 1997,Malcolm Baldrige National Quality Award, AwardCriteria (NIST, Gaithersburg).

Nitkin, D. and L. J. Brooks: 1998, ‘SustainabilityAuditing and Reporting: The CanadianExperience’, Journal of Business Ethics 17(13),1499–1507.

Ostapski, S. A. and C. N. Isaacs: 1992, ‘CorporateMoral Responsibility and the Moral Audit;Challenges for Refuse Relief Inc.’, Journal ofBusiness Ethics 11(3), 231–239.

Poe, R.: 1994, ‘Can We Talk’, Across the Board 31(6),16–23.

Porter, M. E.: 1980, Competitive Strategy: Techniquesfor Analysing Industries and Competition (The FreePress, New York).

Power, M.: 1997, The Audit Society, Rituals ofVerification (Oxford University Press, Oxford).

Preston, N.: 1996, Understanding Ethics (TheFederation Press, Sydney).

Shaw, W. H.: 1996, ‘Business Ethics Today: A Survey’,Journal of Business Ethics 15, 489–450.

Shaw, W. H. and V. Barry: 1992, Moral Issues inBusiness, 5th edition (Wadsworth Publishing,Belmont, CA).

Shell: 1998, Profits and Principles; Does There Have tobe a Choice?, Shell Report.

Sherwin, D. S.: 1983, ‘The Ethical Roots of theBusiness System’, Harvard Business Review 61(6),183–192.

Singer, P.: 1993, How are We to Live: Ethics in an Ageof Self-Interest (The Text Publishing Company,Melbourne).

Stahl, M. J. and D. W. Grigsby: 1997, StrategicManagement; Total Quality & Global Competition(Blackwell, Oxford).

Taylor, B. et al.: 1999, ‘Special Issue: Putting Valuesinto Action’, Long Range Planning 32(2).

Tsahuridu, E. E. and R. J. McKenna: 2000, in print,‘Moral Autonomy in Organizational Decisions’, inCurrent Topics in Management, Volume 5 ( JAI Press,San Francisco).

Vinten, G.: 1998, ‘Putting Ethics into Quality’, TheTQM Magazine 10(2), 89–94.

Weaver, G. R., L. K. Trevino and P. L. Cochran:1999, ‘Corporate Ethics Practices in the Mid-1990’s: An Empirical Study of the Fortune 1000’,Journal of Business Ethics 18(3), 283–294.

Ton van der Wiele Erasmus University Rotterdam,

Room H15-02, P.O. Box 1738,

3000 DR Rotterdam, The Netherlands,E-mail: vanderwiele@few.eur.nl.

Peter KokErasmus University, Rotterdam,

The Netherlands.

Richard McKenna and Alan BrownEdith Cowan University, Perth,

Western Australia.

A Corporate Social Responsibility Audit within a Quality Management Framework 297