Social Responsibility, Social Enterprise

EAI as Seen in the Media [Electronic Times] New Book: Social Responsibility, Social Enterprise

“Korean Companies Caught in the 'Gap-Eul' Controversy Should Revive Through Social Contribution.”

An empirical study on corporate social responsibility (CSR) and

creating shared value (CSV)

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Can Companies Focused Solely on Profit Achieve It?

Recently, Korean society has been heated by the so-called “Gap-Eul controversy.” As asymmetric contracts and unfair practices between headquarters and franchisees were revealed, social debate intensified. As the controversy escalated, a phenomenon emerged where all relationships involving companies were viewed through the dichotomy of “Gap and Eul.” Companies under scrutiny even issued public apologies, promising “changed management” and “responsible companies” in the future, but the public's gaze remained critical. The skewed pursuit of profit by corporations had been met with harsh criticism. It seems it will take time for companies rejected by the public and consumers to recover.

Why Don't Korean Companies' Social Contribution Activities Overcome Consumer Distrust?

Korean companies' budgets for social contribution activities are among the highest in East Asia relative to their sales. Korean companies have dedicated departments and personnel for social contribution and allocate substantial budgets. They also implement activities that align with international standards, such as ISO 26000 and the guidelines for sustainability reporting provided by the UN. Despite these efforts, the level of trust in large corporations among Koreans remains at rock bottom. According to the “RADAR International Survey” conducted jointly by GlobeScan, the East Asia Institute, and the Social Enterprise Research Center, Koreans showed the lowest trust in large corporations among the 23 surveyed countries. What are the reasons for this low corporate trust? Despite the companies' efforts, the scale of budgets allocated to social contribution activities, and the actual activities undertaken, is there no way to resolve the persistent distrust between the general public and large corporations?

The Limitations of Corporate Social Responsibility (CSR)

The idea that companies pursuing only profit cannot guarantee sustainable long-term growth has existed for a long time. Unethical companies are shunned by consumers, and their corporate value declines. Furthermore, healthy companies can achieve sustained growth and profits only when they coexist with a healthy society, as a saturated market leaves no room for companies to generate profits. This line of thinking has encouraged corporate social contribution activities. Companies are participating in social welfare by directly donating to welfare institutions, engaging their employees in social service activities, and redistributing social wealth through continuous support for the socially vulnerable and marginalized. Some companies have been planting trees for decades in relation to environmental issues, while others strive to reduce greenhouse gas emissions, establish resource recycling systems to minimize waste, and work to create urban green spaces.

While it is highly desirable for companies to engage in social contribution activities in various ways to fulfill their social responsibilities, such one-sided activities inevitably have limitations. CSR-based social contribution activities are viewed as acts of "good deeds" by companies, separate from profit-making. Moreover, the budget is limited. This means that CSR-based activities can be suspended at any time if the company faces difficulties or if the top management's values change. Instead, sustainable social contribution activities are needed, which are linked to the company's fundamental purpose of profit-making and simultaneously promote the mutual growth of society.

Creating Shared Value (CSV): Symbiosis and Mutual Growth Between Corporations and Society

The core of Creating Shared Value (CSV) is to enhance corporate competitiveness while simultaneously developing the conditions of the society in which the company operates. It is crucial for both the company and society to benefit from the value created when companies generate profits and social value concurrently.

Exemplary Cases of CSV

Instead of merely improving the income of coffee farmers in Africa and Latin America through fair trade, as in the past, Nestlé developed and implemented a CSV program that provides farmers with innovative farming methods, technology, and financial support to ensure a stable supply of high-quality coffee beans. This initiative not only increased Nespresso's coffee sales by over 30 percent since 2000 but also increased farmers' incomes by 15 to 30 times more than what could be achieved through fair trade alone.

CSV demands a shift in perception from past corporate social contribution activities, which relied on one-sided benevolence. When society is developed and new value is created as an extension of a company's normal profit-making activities, both the company and society are beneficiaries. Because CSV is intertwined with a company's profit-making activities, it is neither temporary nor one-sided. This is why corporate social contribution based on CSV can be sustainable.

Table of Contents

Foreword

I CSR in Transition

Chapter 1 The Development Process of CSR Discussions ■ Jeong Gwan

Chapter 2 International Comparison of Anti-Corporate Sentiment and CSR Perception: Diversity and Typological Characteristics ■ Jeong Han-wool

Chapter 3 The Path to a Responsible Society: Team Play, Not Individual Effort, is Important ■ Jeong Han-wool • Jeong Won-chil

II The Current State of CSR in Korea: An Alternative Model is Needed

Chapter 4 Four Dilemmas of CSR in Korea as Seen Through Public Opinion ■ Jeong Han-wool

Chapter 5 Determinants of Anti-Corporate Sentiment: Politics Shapes Corporate Image ■ Jeong Han-wool

Chapter 6 Limitations of CSR Practices in Korea: Focusing on Environmental CSR ■ Kim Bo-mi

III Seeking Alternatives for Responsible Management

Chapter 7 Adding Value to Contribution: Realizing Creating Shared Value (CSV) for Social Problem Solving ■ Jo Hee-jin

Chapter 8 Adding Competence to Responsibility ■ Lee Young-dong

Chapter 9 Adding Ethics to Profit: Social Enterprise Strategies for Building a Sustainable Responsible Management Ecosystem ■ Jang Yong-seok • Jo Hee-jin