Internationalisation and corporate social responsibility: How Heineken met the challenge of social activism
This paper reports on a unique 8 year study into the way the management of Heineken responded to a campaign of social activism in the late 1990s sparked by the way the company’s products were marketed and sold in Cambodia.
In the era of globalisation companies which expanded into new markets in the developing world, sometimes faced unexpected cultural and social issues.
When Heineken entered the Cambodian market it did so via local agents who employed a largely female sales force to sell beer. This was how beer was sold in Cambodia. A campaign of social activism arose against Heineken because there was a perception that the women selling beer in bars and clubs faced unacceptable risks at work. Heineken like many global companies acknowledged that it had new social responsibilities. It had managers dedicated to deal with matters of corporate responsibility.
To date most academic research into the impact of social activism has been from the point of view of the activists themselves not the company. Studies on company responses to activism are rare and, where they exist, they normally look back at events well after they happened. In contrast, the Heineken study was based on management’s response to social activism as it unfolded as one of the co-authors was employed in Heineken’s global healthcare department. The research provides a clear insight into what decisions were made and how they were made.
The Heineken study is unique in two ways.
- It is the first time management’s response to a campaign of social activism has been studied from inside a company, over an extended period.
- It is also based on a cybernetic model of corporate responsibility published in another paper by Professor Roome.
The cybernetic model breaks down management’s response to the activist into simple steps. These steps involve:
- sensing and making sense of the external pressure from the activist
- making policy
- co-ordinating the response dictated by policy
- controlling the performance of that response
- implementing the response to influence the conditions the activist was concerned about.
The case uses this framework to chart the way Heineken managers responded to the social activists’ initial demands and then to a renewed set of demands over the eight years. The study showed clearly what the managers wanted to achieve. It also shows when they had, and when they did not have, the policies, or the coordination mechanisms or controls to bring their plans into action.
The company response was split into two stages. The first phase led to improved working conditions for the women selling beer, including training in healthcare and dealing with difficult customers. It also introduced more professional bar management. This meant the Heineken beer promotion women had the best working conditions in Cambodia.
The second phase involved attempts by the company to work with other companies, the government and NGOs to change the attitudes of Cambodian beer drinkers to the women that serve them beer. This was less successful as not all the other companies wanted to join the initiative.
While other studies of how companies respond to social activism suggest the importance of economic analysis of the actions available to companies, the Heineken study demonstrates that management responses were determined by senior managers’ interpretation of the company’s core values, and the ability to create policies or to control and coordinate actions. Economic analysis had a very limited role in the decision making.
This case suggests that economic tools provide an insufficient basis for decision making in the face of social activism. Instead, a broader approach to decision making is needed when managers are confronted by complex social and environmental issues of this kind.
Source: “Management Responses to Social Activism in an Era of Corporate Responsibility; a Case Study” by professor Nigel Roome (Vlerick Business School) together with co-authors Katinka C. van Cranenburgh (ESADE Business School, Barcelona, Spain) and Kellie Liket (Erasmus School of Economics, Rotterdam, The Netherlands). Journal of Business Ethics.
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