[CSR Monitor Vol.1] South Korea's Four Major CSR Dilemmas as Seen Through Public Opinion

Major Results of the 2013 RADAR Korea Survey

Introduction

This report analyzes the results of the CSR perception survey conducted in Korea, as part of a 26-country international survey organized by the global public opinion research firm GlobeScan, with the East Asia Institute (EAI) and the Social Enterprise Research Center serving as the responsible research institutions in Korea.

The concept of CSR began to be seriously discussed and disseminated in Korean society primarily due to international efforts to standardize and institutionalize CSR for sustainable growth, which were introduced through domestic media. Notable examples include the UN Global Compact, which advocates ten CSR principles; the International Organization for Standardization's social responsibility standard, ISO 26000; and the Global Reporting Initiative (GRI) for sustainability reporting standards. During this period, traditional CSR theories by scholars like Carroll and CSR case studies from foreign companies gained public attention through media coverage. It is true that corporations also began to show interest in and respond to CSR as part of their efforts to adapt to the changing international environment (Carroll 1999; Park Soo-jung & Cha Hee-won 2009; Ko Dong-soo 2011).

Historically, there has been a strong tendency to emphasize only the positive aspects of CSR, and consequently, there has been insufficient theoretical and empirical discussion regarding the problems and limitations arising during the process of establishing the CSR concept in Korean society (Orlitzky et al. 2003). While highlighting the positive aspects of CSR was somewhat unavoidable during its introduction and did contribute positively to the spread of CSR discussions, it is questionable, over a decade after its introduction, whether CSR in Korea is on the right track and whether Korean society possesses accurate diagnoses and remedies for the side effects and dilemmas that have emerged.

This report aims to diagnose the dilemmas arising in the discourse and practice of CSR in Korea at the perception level, based on the Korean survey results from the 2013 GlobeScan-EAI-Social Enterprise Research Center RADAR 2013 survey. The current dilemmas facing CSR in Korea are categorized into four main areas: (1) Deepening distrust of large corporations, (2) Strengthening public opinion for CSR regulation, (3) Weakening consumer behavior in CSR consumption, and (4) Shrinking CSR communication. Through this analysis, we aim to confront the uncomfortable truths about CSR in Korea, as revealed through public opinion, and emphasize the need to initiate efforts to find solutions.

Dilemma 1: The Era of 3 Trillion Won in Social Contribution, and Growing Distrust of Large Corporations

The Era of 3 Trillion Won in Corporate Social Contribution Expenditures

Since the early 2000s, when CSR discussions began in earnest in Korean society, social contribution expenditures by large corporations in Korea have rapidly increased. According to the Federation of Korean Industries' (FKI) <White Paper on Social Contribution>, the total social contribution expenditure of 202 companies in 2002 was only 1.087 trillion won. However, ten years later, in 2011, the total social contribution expenditure of 222 companies reached 3.124 trillion won. This marks the advent of the era of 3 trillion won in social contributions. On a per-company basis, the average social contribution expenditure was around 5 billion won from 2002 to 2005. However, around 2006, when CSR discussions gained momentum, it surged to approximately 8.9 billion won. In 2008, it exceeded 10 billion won, and by 2011, it rose to about 14.07 billion won per company (Table 1).

These figures are known to be higher than those of Japanese companies. In 2011, the ratio of social contribution to pre-tax profit was 3.20% for Korean companies, higher than the 2.73% for Japanese large corporations (364 companies). When looking at the ratio of social contribution to sales, the average for 222 Korean companies in 2011 was 0.26%, which is also higher than the 0.24% for 428 Japanese companies (FKI White Paper on Social Contribution 2012).

[Figure 1] Total Social Contribution Expenditures of Large Corporations (Trillion Won) and Expenditure Ratio to Sales (%)

Note: Figures in parentheses indicate the number of companies surveyed.

[Table 1] Average Scale of Social Contribution Expenditures by Companies Participating in the FKI Survey (Unit: Billion Won)

Source: Reconstructed by the author based on the FKI <White Paper on Social Contribution> (2012).

"Trust large corporations" 44% in 2012 ⇒ 38% in 2013

A notable point is that despite the continuous increase in CSR-related expenditures by large Korean corporations, these efforts have not translated into improved corporate reputation and image. The institutional trust assessment in [Figure 2] shows that compared to 2012, international organizations, academic institutions, and NGOs received higher trust ratings. The trust in the Korean government and Korean media/mass media, which were rated lower than large corporations, has increased. In contrast, Korean large corporations were the only institutions among those surveyed to see a decline in trust in the 2013 survey, recording the lowest score. The 2013 survey results indicate that trust in the new government increased by 6 percentage points to 48%, foreign companies operating in Korea received 45% trust, and media/mass media received 41% trust. However, domestic large corporations only garnered 38% trust, a decrease of 6 percentage points from the previous year.

[Figure 2] Changes in Institutional Trust: 2012-2013 (%)

Source: GlobeScan-EAI-Social Enterprise Research Center Korea Survey (2013), Q1At (n=502).

CSR Reputation by Industry: A Trend Towards Equalization at a Lower Level

[Figure 3] also confirms a trend of "equalization at a lower level" in CSR reputation by industry since 2012. Prior to 2012, large corporations in industries forming the backbone of the Korean economy, such as high-tech IT, telecommunications, power, and automotive, led the CSR reputation of Korean companies. Industries with high environmental risks, like oil/refining, chemicals, and mining, as well as industries harmful to health, such as liquor and tobacco, and industries unfavorable to the common people's economy, like banking/finance, received negative evaluations, showing distinct differences in reputation.

However, despite continuous emphasis on social contribution activities and ethical management, and significant CSR cost expenditures by companies, the 2013 survey shows a sharp decline in the reputation of companies in the IT and telecommunications sectors, and the power and automotive industries, which had previously led the way. Industries that received negative CSR reputations have remained stagnant, leading to an overall equalization at a lower level. CSR reputation has generally worsened, and the differentiation in the evaluation of CSR activities across industries is disappearing. This is noteworthy as it could weaken the motivation for companies to actively engage in CSR activities.

[Figure 3] CSR Reputation of Large Corporations by Industry: Percentage Responding "Doing Well" (%)

Source: GlobeScan-EAI-Social Enterprise Research Center Korea Survey (2013), Q23Bt (n=498).

Crisis of Authenticity: "Corporate CSR Activities are for Image Improvement" - 80%

The primary reason for the equalization of CSR reputation at a lower level and the decline in trust towards large corporations, despite intensified CSR activities, appears to stem from the perception that corporate profit-seeking and social responsibility are conflicting values. According to attribution theory, the public's perception of the motives behind CSR activities influences their attitudes and purchase intentions. If members of society dismiss CSR activities as hypocritical posturing for corporate self-interest, CSR evaluations are bound to worsen (Park Soo-jung & Cha Hee-won 2009; Ahn Bo-seop & Kwon Geun-hye 2005).

In the 2012 survey, regarding the statement "The reason large corporations fulfill their social responsibilities is not to genuinely contribute to society, but to improve their corporate image," 39% strongly agreed and 41% generally agreed, indicating that 80% of all respondents held a negative view of the authenticity of corporate social responsibility activities. This question presupposes that CSR activities aimed at realizing social value and corporate economic gain (image improvement) are in opposition.

The growing consensus around Porter and Kramer's concept of "CSV (Creating Shared Value)," which argues that corporate economic value (reputation and image improvement) and the realization of social value are shared goals, reflects the limitations of the traditional CSR concept that dichotomously separated corporate economic interests from the pursuit of social value (Porter and Kramer 2011). However, as shown in [Figure 4], the distrust in the authenticity of CSR indicates that the perception has not significantly moved away from the traditional view that opposes corporate CSR activities and their economic objectives of improving corporate image. This poses a perceptual barrier to the broader adoption of the CSR concept in Korea.

[Figure 4] Purpose of Corporate Social Responsibility Activities (%)

Source: GlobeScan-EAI-Social Enterprise Research Center Korea Survey (2012).

Dilemma 2: Surge in Public Opinion for CSR Regulation

"The government should enact laws to promote CSR" 44% in 2008 ⇒ 84% in 2013

There is also a growing public opinion favoring government legal regulation of CSR, rather than relying on voluntary efforts by corporations and society. Sustainable CSR requires not only economic and legal responsibilities but also the operation of self-regulation based on ethical norms and voluntarism (Carroll 1999; Sethi 2003; Vogel 2008).

[Figure 5] asks respondents for their opinion on the statement: "The government should enact laws to ensure large corporations go beyond their traditional economic roles and strive to create a better society, even if it leads to higher product prices or job losses." In the early 2000s, opinions on CSR regulation were divided. From 2002 to 2005, support for regulation ranged from 47% to 51%, while opposition ranged from 44% to 51%, making it difficult to determine a clear majority. In 2006, support for government CSR regulation rose to 63%. However, due to the global financial crisis in 2008 and the heightened sense of economic crisis, public opinion favoring not burdening corporations increased, causing support for government CSR regulation to fall to 44%. By 2010, however, public opinion surged to 83%, advocating for CSR to be promoted through government regulation rather than perceived as voluntary corporate responsibility. In the 2013 survey, this figure rose further to 84%.

This sharp increase in support for regulation can be interpreted as a result of strong expectations for the rapid dissemination of CSR, coupled with recent growing distrust in large corporations' CSR activities. Furthermore, it is important to consider the context of the time, when the economic crisis in Korea was perceived to have been largely overcome, and issues of universal welfare and economic democratization emerged as election topics.

[Figure 5] CSR Promotion Strategy: Attitude towards Government Enactment of CSR Enhancement Laws (%)

Source: GlobeScan-EAI-Social Enterprise Research Center Korea Survey (2013), Q8At_dt (n=502).

[Table 2] Attitudes Towards Government Enactment of CSR Enhancement Laws by Country (%)

Source: GlobeScan, Q8At_dt

Note: Japan and Poland, among the 26 participating countries, did not conduct this survey item.

Dilemma 3: Consumer Duality - The Gap Between Perception and Practice

Maturation of Social Responsibility Ethics and Ethical Consumption Awareness

Since the early 2000s, as CSR discussions have gained prominence in Korean society, consumers' own sense of social responsibility ethics, sharing and shouldering social responsibilities, has also matured. 84% agreed with the statement, "I believe we need to consume less to preserve the environment for future generations," and 77% expressed willingness to pay more for products from socially and environmentally responsible companies. This indicates a significant shift in consumer awareness regarding social responsibility. Furthermore, 66% agreed with the statement, "I recommend to others that they purchase products from companies that are socially and environmentally responsible," and 58% expressed self-reflection with the sentiment, "I feel guilty about the negative impact my consumption has on the environment."

[Figure 6] Consumer Social Responsibility Ethics: Agreement Rate (%)

Source: GlobeScan-EAI-Social Enterprise Research Center Korea Survey (2013), 9t_at), dt), et), ft) (n=1,000).

[Figure 7] shows high levels of perceived efficacy (the belief that one can influence corporate CSR activities) and consumer purchase intention based on CSR activities. Efficacy generally refers to the psychological confidence that influences public interest and action on a given issue (Scholzman 2002; Verba et al. 1995). This increased expectation and confidence in CSR is one of the essential conditions for raising the level of CSR practice in a society (Sethi 2003). This suggests that social pressure for CSR will continue in Korea.

Regarding the statement, "As a consumer, I can influence companies to act responsibly," 72% agreed, demonstrating high CSR efficacy. For the ethical consumption intention, "I only purchase products or services from ethical and responsible companies," 67% responded positively. Furthermore, 57% agreed with the statement, "The supply of products or services considering CSR is sufficient to realize these intentions," indicating a majority perception that CSR-considerate products/services adequately support CSR consumption behavior.

[Figure 7] Ethical Consumerism Perception (%)

Source: GlobeScan-EAI-Social Enterprise Research Center Korea Survey (2013), 8t_at), bt), ct) (n=1,000).

Weakening of Ethical Consumption Behavior

A dilemma arises from the fact that while ethical consumer awareness and efficacy are growing, actual ethical consumption behavior based on corporate CSR activities is actually declining. Ethical consumption behavior is crucial for the dissemination and establishment of CSR because it encourages companies to voluntarily comply with CSR activities through civic regulation, rather than through external coercion like government regulation, thereby strengthening the legitimacy of CSR. Furthermore, ethical consumption behavior is important as it serves as a mechanism linking CSR activities with market economic benefits.

Typical examples of ethical consumption behavior include disseminating evaluations of companies with good CSR practices and making direct consumption choices such as purchasing or boycotting products from those companies. [Figure 8] shows that public experience with boycotting companies with poor CSR practices or engaging in critical word-of-mouth activities, which had steadily increased during the CSR dissemination period in 2008, has since continuously declined to 28%. Conversely, the experience of actually purchasing or recommending products from companies with good CSR practices, which had risen to 45% in the 2009 survey, has now fallen to 37%.

For corporate CSR activities to evolve into the CSV concept, which shares economic and social value, they must be linked to economic incentives such as enhanced market image and reputation through CSR consumption activities, rather than solely relying on government or legal coercion. It is difficult to expect sustainable CSR through legal compulsion alone. A decline in consumer CSR consumption behavior is highly likely to result in weakened motivation for corporate CSR activities and reduced social pressure (Vogel 2008).

[Figure 8] Changes in CSR Consumption Behavior: Experience of Rewards/Punishments (%)

Source: GlobeScan-EAI-Social Enterprise Research Center Korea Survey (2013), 13At(n=502), 16t(n=1,000)

Dilemma 4: Lack of CSR Communication Channels

65% have "never seen or heard of" individual corporate CSR activities.

Another dilemma in the public's perception of CSR in Korea is that while societal interest and awareness of the need for CSR are growing, the frequency of encountering information about the actual social responsibility activities of individual companies is decreasing. In the 2006 survey, 61% (5% strongly, 56% somewhat) responded that they had encountered CSR activity information in the past year in response to the question, "How often have you heard or read in the past year about specific companies striving for social development, environmental protection, or social contribution?" However, in the 2010 survey, this figure dropped significantly to 41% (6% strongly, 35% somewhat). This trend continued in the 2013 survey, with responses indicating frequent exposure to corporate CSR information falling to 35% (6% strongly, 29% somewhat). Responses of "not much" were 55%, and "not at all" was 10%, totaling 65% negative responses.

[Figure 9] CSR Information Acquisition Channels and Major Usage Channels Among Internet Media (%)

Source: GlobeScan-EAI-Social Enterprise Research Center Korea Survey (2013), 10t (n=498).

Communication media are also a problem, with CSR reports having minimal effect.

Currently, most companies are preparing their CSR activity reports in accordance with international standard guidelines such as ISO26000, GRI Sustainability Reporting, and the UN Global Compact. The preparation of these reports and the introduction of CSR activities via company websites can be seen as the main tasks of corporate CSR departments (Park Cheol & Kang Yuri 2012; Lee Jang Won 2007). CSR reports or company websites become the primary channels for CSR communication with consumers. However, among the 176 respondents who answered that they had heard news about corporate CSR activities in [Figure 9], the majority of citizens cited media news reports (85%), corporate advertisements (62%), and internet media (55%) as channels for collecting information about corporate CSR activities. Responses indicating that information was obtained through corporate CSR publications or reports, which companies emphasize, accounted for only 35%, barely above word-of-mouth from acquaintances (friends, family) at 32% (multiple responses allowed).

Among those who obtained information via the internet (97 respondents), internet news articles were the most relied-upon internet media (multiple responses allowed). The response indicating reliance on internet articles was overwhelming at 80% of respondents who cited the internet as a CSR information acquisition medium. In contrast, reliance on social media was only 22%, and utilization of the company's own website was only 18%. From a communication perspective, the fact that consumers are heavily reliant on online and offline media and advertisements for corporate CSR communication appears to be an area that urgently needs improvement. It seems necessary to actively consider communication media and methods for direct two-way communication between companies and consumers.

[Figure 10] CSR Information Acquisition Media and Primary Channels Used Among Internet Media (%)

Source: GlobeScan, East Asia Institute, & Social Enterprise Research Center Korea Survey (2013), 11t_at)-ft) (n=176), 13t(n=98)

Conclusion

The preceding sections examined the dilemma in the perception of CSR among the Korean public, based on the survey results from GlobeScan, East Asia Institute, and the Social Enterprise Research Center. The main findings are summarized as follows.

First, large corporations are strengthening their social responsibility activities and increasing related expenditures. Nevertheless, distrust in large corporations is deepening. The business-friendly attitude that it would be understandable if companies slightly reduced social contribution activities when they posed an economic burden, which emerged around the 2008 global financial crisis, is rapidly disappearing (Jeong Han Wool & Jeong Won Chil 2009).

Second, this distrust is strengthening the argument for regulatory approaches, suggesting that CSR should be driven by government legal regulations rather than voluntary corporate efforts. For CSR to be sustainable, there is a need to shift towards a perspective of shared value creation, where voluntary responsibility based on corporate citizenship and the pursuit of social value are integrated with the realization of economic interests. The current corporate distrust and public opinion favoring CSR regulation appear to pose significant obstacles to such a perceptual shift.

Third, during the introduction and diffusion of CSR discussions in the early 2000s, social ethics have been strengthened among members of society, and awareness and expectations regarding CSR consumption behavior have grown. However, ethical consumerism, which influences consumption behavior and corporate CSR activities based on corporate CSR performance, is actually weakening. This is a kind of gap between perception and practice. Just as there is a growing tendency to perceive corporate CSR as hypocritical behavior aimed at pursuing economic gain, consumers, while emphasizing the importance of CSR, are not engaging in civic regulation of corporations through their consumption behavior.

Fourth, the inadequate provision of information about individual companies' CSR activities to consumers and members of society is also a problem. Since the mid-2000s, the frequency of contact with CSR-related information from companies has continuously decreased. While weakened efforts by consumers and members of society to acquire information may be a factor, the lack of media for two-way communication about corporate CSR activities has also been identified.

Synthesizing the 2013 survey results, it appears to be a time for a comprehensive review of the perspective on CSR formed during the introductory phase of CSR in Korean society, the ways companies respond to CSR demands, and the overall perceptions and behaviors of consumers regarding CSR. In particular, the public's feeling that government regulation is necessary for CSR indirectly indicates a significant gap between the level of CSR expected by the public and the CSR implemented by corporations. For example, if the public desires CSR that can drive social and national development from a more macro perspective, corporations tend to implement CSR at the level required by global norms. Consequently, CSR has often been limited to short-term marketing strategies.

To overcome this and move towards sustainable CSR, the government must foster an ecosystem where CSR can be voluntarily pursued by providing multifaceted support, including economic incentives, education and promotion, and networking opportunities for corporate CSR activities. When close cooperation between the government and corporations on CSR is achieved under the common goal of social and national development, the public will also shift their perception of CSR and engage in direct actions such as ethical consumption. In other words, by forming a virtuous cycle among the government, corporations, and the public surrounding CSR, sustainable CSR and coexisting CSR between corporations and society can be achieved. This will be the first step in overcoming the current CSR dilemma.

The views and content of this report are those of the author and do not represent the official position of the collaborating research institutions, East Asia Institute and the Social Enterprise Research Center. When citing data from this report, please specify the source as "GlobeScan (or Globscan), Social Enterprise Research Center, & East Asia Institute (or EAI) Survey."