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A Better Model for Socio-economic Governance?

CSR versus Financialisation in Global Food Firms
Un meilleur modèle de gouvernance socio-économique ?
RSE contre financiarisation dans les entreprises agroalimentaires mondiales
La Responsabilidad Social de las Empresas (RSE) en las firmas agroalimentarias mundiales
Bryn Jones et Peter Nisbet


La responsabilité sociale de l'entreprise (RSE) est aujourd'hui largement promue, comme une forme de gouvernance socio-économique navigant entre les forces du marché et le contrôle étatique ; et ce, afin de résoudre les problèmes de la désintégration sociale et de l’aveuglement du monde des affaires. Les aspects cruciaux de la pratique de la RSE dans les multinationales de l’agroalimentaire sont étudiées ici afin de tester l’aptitude de la RSE comme solution systémique aux problèmes socio-environnementaux liés à l'économie de marché. La question est de savoir notamment si les politiques RSE peuvent préserver ou améliorer les intérêts des partenaires sociaux en matière d'emploi et de protection socio-environnementale tout en poursuivant les politiques définies par les stratégies financières. Bien que les entreprises aient des politiques de RSE élaborées, nous pouvons constater que celles-ci n’ont que peu d'impact sur la rationalisation de leurs activités au Royaume Uni face aux stratégies d’actionnariat global en vigueur dans les plus importantes multinationales de l'agroalimentaire. L’analyse révèle un parti pris en faveur des priorités externes ou d’image de marque, plutôt qu'en faveur des priorités internes de sécurité de l'emploi et d’intérêt collectif des unités de production. Le processus de fermeture de deux sites montre notamment que l’idée même d’une prise en charge des salariés et de leur intérêt en tant que partenaires sociaux reste incompatible avec les priorités actionnariales. Ce qui signifie aussi que la RSE est fondue dans une stratégie managériale de soutien de l'image de marque et de la réputation des entreprises, plutôt que dans l’inclinaison des politiques de gestion vers un développement durable en matière sociale ou environnementale, et la collaboration des partenaires sociaux.

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Notes de l’auteur

An earlier version of this paper was given to a session of the SASE Conference, Capitalism in Crisis, Paris, 18th July 2009. We are grateful to those participants and to the editors and reviewers of Regulation for their comments and advice.

Texte intégral


1In a speech to business leaders, David Cameron (the UK’s new, Conservative Prime Minister) argued for a further devolution, decentralisation and derogation of state powers to local governments, civil society and business. This was nothing less than a blueprint for dealing with the intensifying problems of managing a national society in the face of globalisation, fiscal crisis and social disintegration: a redesign of socio-economic governance. Policies to implement this strategy are still being developed but the basics of the business role have been in place for some years; both in the UK and other countries, as privatisation and Corporate Social Responsibility (CSR). Cameron’s speech emphasised three aspects of business’s social role.

  • He offers a ‘deal’ between government and business. ‘In return for economic stability; lower taxes; low regulation and minimal interference as well as cutting the state budget deficit and cutting corporation tax to 24 per cent, business would have to help combat: social breakdown from worklessness… obesity… the break up of families… the break down of communities… environmental damage… to economic dislocation.’

  • ‘Business commitment would be voluntary: it’s not compulsory. It’s not new regulations.’

  • Government priorities for business involvement: ‘improving skills and creating jobs; supporting small and medium-sized enterprises; reducing carbon and protecting the environment; improving quality of life and well-being. and finally… supporting your community.’ (Cameron, 2010)

2Neither the social contract nature of this governance model, nor the range of commitments, nor its voluntary aspect, is novel or specific to the UK. Clinton’s New Democrats first declared CSR as part of a social settlement in the USA in the 1990s (Reich, 1998). Other European countries have adopted public roles for CSR, with varying degrees and forms of emphasis (Fairbrass, 2008) and the European Commission and European Parliament have, since the early 2000s, been promoting CSR as an additional means of combating social and environmental problems. Moreover the Commissions stance, like Cameron’s, stresses the voluntary nature of any corporate engagement (cf. Commission of the European Communities, 2006). Yet if CSR is to play such a significant role in socio-economic governance – both disciplining business irresponsibilities and replacing overloaded or under-funded public agencies – then detailed answers are needed to three strategic questions.

3Firstly, will CSR-focussed corporations, particularly large, financially-driven multinationals need to reconcile contributions to societal causes with such economic pressures as cost-minimisation and profit generation? Will, and do, pressures from one of these priorities lead to compromise, or even failure in the other sphere? In this article we call this doubt ‘the consistency problem’. Secondly, if corporate engagement is to be voluntary, what influences firms choice between the social and environmental causes which they support? Will financial and business pressures influence this choice more than social or environmental needs? We describe this contrast, below, as the ‘two masters problem’. Thirdly, we ask how firms allocate and operationalise resources and policies for CSR within complex managerial structures - between locations, issues, and functions. Is the allocation done in ways that match the expanded public role for which they are being touted?

4Evidence of the ways that firms organise and apply CSR policies is of critical importance for if the model is to act as a solution to the systemic problems currently confronting capitalist societies. Comprehensive evidence would require a whole research programme. However, significant indications can be obtained from critical cases: leading CSR firms in a key global industry. Food manufacturing corporations provide pertinent evidence, on actual practices, for testing the aspirations of the Cameron strategy in the UK; and, probably, its counterparts elsewhere. Because of their transnational scale the situation in these firms allows us to separate out the influence of societal variables. Methodologically, we are proposing that the dynamics of CSR leaders in a key global industry may be more informative than either aggregated data across sectors in a national economy, or evidence at the detailed micro-level of individual companies.

5Food manufacturing cases represent a critical test for the wider CSR model because their sector has an extensive tradition of business responsibility. It also typifies business operations in the global economy: facing challenges to develop CSR roles but also to meet competitive business pressures. Multi-national food and drinks corporations show how firms choose the corporate management specialisms which they designate to undertake support for social causes and which causes to support. In particular: why and how far CSR is ring-fenced to selected social and geographic topics and to specific stakeholders – the interest groups affected by business activity. ‘Ring-fencing’ means that firms consequently ignore or avoid other equally, or more important, public issues; from which they are de facto absolved of responsibility. In the present economic crisis domestic employment practices are an increasingly critical issue.

6This is a topic which the advocacy literature also emphasises because CSR philosophy defines employees as primary stakeholders (Brammer et al, 2007; Greening and Turban, 2000). However, media and corporate publicity tends to show relatively little concern for social dimensions of employment such as insecurity. This must be an important influence on individuals’ welfare and life chances in societies in which the main access to personal and public prosperity comes through waged employment (Arulampalam et al, 2001; Green et al, 2000). Yet plant closures and collective redundancies do not seem to be significantly affected by the strength or sophistication of firms’ CSR commitments; even though the decimation of workplaces can also weaken the social capital of local communities .Such social capital underpins the welfare and employment security of individuals and is even more important for CSR in liberal market economies (LMEs) such as Britain. In those societies state regulation and trade union influence is being displaced; unlike, for example, Germany where CSR-type activity tends to be constrained by high density of regulations, works councils and co-determination (Kindermann, 2009, p.31).

7Corporate Social Responsibility (CSR) becomes even more prominent as a basis for social governance (Crouch, 2008; Reich, 2008; Zumbansen, 2007) because it has evolved as a civil society complement to the still dominant neo-liberal economic paradigm; even posing, potentially, as the saviour of that model. It purports to harness the economic and managerial resources of business, especially the larger, stock-financed corporations, in partnerships with various state and civil society agencies, while reducing the costs otherwise incurred by the latter bodies. But the case for CSR-based governance hinges on the capacity of large business firms to evolve and adapt their management and processes beyond purely economic criteria. Thus evidence of the ways that they organise and apply CSR policies is of critical importance for the further expansion of the model.

8The financialisation of almost all economic relationships and practices (Dore, 2008; Lazonick and OSullivan, 2000), as the dominant economic force in neo-liberalism’s global market economy, creates imperatives to satisfy investors. We consider below how the resultant priority given to shareholder value also influences the scope, organisation, implementation and corporate definitions of their CSR policies. We will see how traditional social responsibility, sometimes dubbed industrial welfare (Fitzgerald, 1999) and associated with business philanthropy and paternalistic welfare arrangements for workforces and the local communities is displaced by contemporary CSR. Displacement occurs through, ring-fencing and is shaped by financial priorities, for closer alignment of social contributions with companies’ overall business strategies: marketing priorities, product and consumer specialisations and brand images and reputation management (Banerjee, 2007 21-2; Jones 2007). Such focuses may also be highlighted by media publicity and NGO campaigners’ priorities: environmental impacts, overseas human rights and wage exploitation and working conditions in developing societies. Such emphases raise doubts about firms’ capacity to maintain more traditional, paternalistic responsibilities in the face of limited resource capabilities.

9In corporate and public definitions of CSR the general management of European workforces may be deemed relatively unimportant because in developed economies these may be regarded as the responsibility of stronger state regulation. NGOs and media highlight the plight of communities and workers in developing societies, but a CSR focus on corporate functions such as Human Resource Management (HRM) in developed economies is not seen as important. CSR is regarded, primarily, as applicable to external aspects of business, rather than the internal spheres of work and employment (Barnard et al, 2004). Thus our research tried to assess whether, and how far, ring fencing of CSR excluded employment practices; even those with wider social impacts - collective redundancies and plant closures.

  • 1  Some of this reportage draws on material previously published in Jones and Nisbet (2011).

10The resulting analysis of our findings1 is set out below within three categories. The first outlines the global food industry’s scale and significance, its presence and development in the UK and the impact of financialisation and shareholder value strategies on selected firms’ operations there. In the second category, the general evolution, dynamics and contradictions of CSR are related to its focus and organisation in four global food firms’ UK operations. The third section presents more detailed, case-study, evidence of how conflicts between CSR principles and financially-driven restructuring to close UK plants undermines the capacity of CSR to maintain sustainable workplaces and communities.

1. Financialisation and the global food industry

11The well-known varieties-of-capitalism perspective has also analysed the increasing salience of CSR, identifying the impact of national business systems and institutions, as well as regulatory and welfare frameworks, on the scope and organisation of corporate social roles (Apostolakou and Jackson, 2009; Kindermann, 2009; Matten and Moon, 2008; Midtun et al, 2006). National institutions undoubtedly constrain and shape firms’ approach to CSR. But the circuits of global business predominating in some business sectors may dominate national circumstances (Zumbansen, 2007, p. 2; Morgan and Kristensen, 2006) Of these international financial pressures political and academic observers have increasingly noted the significance of an intensified financialisation as:

The increasing role of financial motives, financial markets, financial actors and financial institutions in the operation of the domestic and international economies. (Dore, 2008)

12In recent decades the return on investment achieved by individual businesses has become an over-riding determinant of whether they flourish or falter. The acme and anthem of corporate success has become shareholder value – the capacity to meet security analysts profit projections (Dobbin and Zorn, 2005) – by generating profit levels that the international financial sector expects and by allocating these to the maximisation of returns per share and/or share prices.

13After the crisis years of the 1970s and 1980s calls for the priority of owners’ property rights successfully demoted all other forms of corporations’ social accountability. The diversified conglomerates from the previous takeover boom were unbundled into more focussed firms because this streamlining improved firms’ stock market valuations compared to conglomerates’ fuzzy identities: i.e. heterogeneous mixes of activities which were hard for external analysts to disentangle and assess. Because investors increasingly wanting predictable profits and losses and knowledge of firms’ likely profitability, analysts’ reticence could diminish the financing prospects of corporations (Dore, 2008).

14As Dore points out, the predominant institutional investors in insurance, pension and other funds are effectively money managers whose decisions reward short-term, relative performance by corporations and other profit-making loci for investment. The growing presence of this orthodoxy, personified in the rise of financial managers amongst US corporations (Fligstein, 1990), was reflected in MNCs’ ownership structure. Managements have come under increasing pressure to raise returns on the capital invested in their firms. Business strategies have been financialised with priority given to policies which raise shareholder value (Lazonick and O’Sullivan,2000). As one influential financial consultancy formula, of a particularly stringent shareholder value measure, illustrates:

Companies have a clear directive with EVA™ to improve returns earned on existing capital, to invest in projects that earn returns above the cost of capital and to sell assets that are worth more to others (Milano and Schwartz, 1998; cited in Froud et al 2000, p. 83).

15As labour costs are easiest to control an inevitable business outcome is endless restructuring with important consequences for corporate workforces Froud et al 2000, p.108)

16These traits are particularly applicable to the global food and drink sector. Although the top 10 firms had only 12.9% global market sales there is considerable concentration in countries, regions and categories of food and drink. For example Coca-Cola and Pepsi-Cola have, between them, around 75% of the US drinks market (​doc/​1G1-130933632.html). Slightly lower levels of concentration apply in soft drinks, biscuits, ice cream and sweeteners in Western Europe (Palpacuer andTozanli, 2008, p.75) Moreover, in the European Union the food and drink industry is the largest manufacturing sector with an annual production value of €815 billion, employing four million workers ( -1 Apr-2006).

17The global firms have achieved considerable sales penetration in the UK where employment of 432,000 in the sector in 2008 was 14% of all manufacturing. The UK has witnessed a major decline in traditional occupational opportunities in the past 20 years. Yet food manufacturing remains an important employer of blue-collar workers with the largest proportion, 26%, of the total food and drink workforce in 2004 being machine operatives. Unlike other manufacturing sectors, reductions persisted irrespective of the state of the rest of the economy. Between 2000 and 2006, 79,000 jobs were lost: a 16% drop in employment in the sector (Improve Ltd, 2008).

18This contraction in the midst of general prosperity arises from financialised business strategies for recurrent mergers, acquisitions, restructuring, and disinvestments. Between January 1987 and June 2003 the combined total of these transactions in, and by the worlds top 100 food TNCs reached 3,926; equivalent to averages of 393 for each firm over 16 years; or 24.5 changes per firm per annum! In the specific case of plant and subsidiary closures, between 1988 and 2002 only 8% of these occurred in the USA, whereas 78% happened in Western Europe. Similarly with mergers – often a precursor to rationalisation and closures– between and amongst MNCs: 20% of these took place in the USA. But Western Europe accounted for 66% of the total. Much of this rationalisation is attributed to the biggest MNCs increasingly concentrating their focus on a small number of global products and brands (Tozanli, 2005, 8).

1. 1. Financialisation and Rationalisation

19Over and above restructuring arising from the endogenous process of consolidation within the European Single Market, the pressures of global financialisation and the stress on shareholder-value provided a more direct driving force. Goldman Sachs investment bank amongst other institutions was advising investors in 2005:

take a cautious view of the packaged food industry… uninspiring growth outlook as a key reason for wariness… (the) investment bank said companies with focused portfolios perform best. (, 2005)

20From the late ‘90s food and drink corporation began seeking even higher financial returns via branding, product innovation and global scale economies; as well as. international growth, not by organic investment, but by acquisitions financed by financial markets. Restructuring also meant a strategy of developing large macro-regional factories, specialized by product lines to supply an entire region and secure scale economies and productivity increases (Palpacuer and Tozanli, 2008).

1. 2. Four Global Food Firms

  • 2  Data on these firmswas collected through documentary analysis of trade union, corporate, and exter (...)
  • 3  The index ofsector globalization measures “how far a firm has developed homogeneous product-market (...)

21The four food firms which we investigated through their UK operations- were amongst the top ten in the world.2 In terms of Palpacuer and Tozanli’s (2008) indices of relative globalisation, all fell into the range of 59-69%; for the extent of their Geographic Globalisation and 75-100% for Sectoral Globalisation.3 These firms, given pseudonyms to preserve confidentiality of respondents, had the following principal characteristics.

22Mangetout had 283,000 employees and 511 factories world-wide and 140 in Europe; where its headquarters are based. Its UK factories represented 13% of European output. It is the world’s second largest producer of processed foods and the third largest for confectionery with 7.7% share of the global market. Moremeals has headquarters in the USA and 98,000 employees with 168 manufacturing and processing plants around the world. In the UK, centre of its European operations, it had 1,100 employees with 680 in production operations. Moremeals was the world’s second-largest food and drinks firm and the fourth largest confectionery maker. Revueline is also centred in Europe but worldwide it had 179,000 people in 100 countries with 2007 revenues of £40 billion. Its 11 UK locations employ 2,000 people and that country is Revueline’s second biggest contributor to total world sales. It was the world’s sixth largest confectionery producer (2006). Finally, Candybrands with headquarters in the UK has 45,000 employees in over 60 countries. The UK and Eire together host eight manufacturing sites with 5,700 employees. Candybrands was the worlds largest confectionery company: in 2006 it had a 10.1% share of the global market (Sources: company reports; Palpacuer and Tozanli, 2008).

1. 3. Financialisation, closures and redundancies in the four firms

23Mangetout’s 2002 Worldplan aimed to reduce its 511 plants to 350 and create ‘Centres of Excellence’ in its main trading regions, e.g. Europe. Like other MNCs in the food and drink sector, Mangetout’s reports and investor publications explicitly linked this plan to maximising value. By working fewer resources more efficiently the resultant higher profits could be returned to shareholders. The UK outcome was the closure of its main northern plant. Between 2002 and 2008 four other UK plants were closed and workforces at several other operations were reduced. These included the UK plant making chilled deserts which would (and did) close in by September 2004. This plant’s production would be transferred to a factory in France, previously devoted to yoghurt. Although the French plant was struggling economically, it was made the centre for all chilled deserts because it was believed that French consultation rules on closures would make it more difficult to close. The algorithm behind these strategic manufacturing decisions, pervasive throughout the sector, was brutally simple: concentrate production for bigger volumes → achieve scale economies → lower costs.

24Slightly later, Moremeals proclaimed a seven-point business plan, ‘strategy five’, aimed at driving out costs and maximising use of assets. ‘Creating a leaner cost structure and making better use of our assets to generate savings we can reinvest in brand-building’ (Corporate Fact Sheet 2006). Moremeals’ chairman described these plans as reflecting: a clear sense of urgency at the 2007 Annual General Meeting: “Every day, we focus on what we can… to get growing and deliver superior shareholder value”4A 2004 plan had aimed to close 19 production sites and eliminate 5,500 jobs. A new plan in 2006 proposed closing up to 20 production plants and cutting an additional 8,000 jobs; comprising 8% of Moremeal’s global work force (Associated Press: Jan. 30, 2006).

25Revueline had announced a growth path strategy: as far back as 1999; aimed at faster expansion by focusing on fewer, stronger brands. In this strategy 10 of its then 70 food brands would be closed or sold off, together with any subsidiary business making below average profit5. This was insufficient for the stock markets. By 2001, analysts and investors voiced concerns at the firm’s performance. Credit Suisse First Boston downgraded Revueline’s stock from a ‘hold’ to a ‘sell’ rating, even though progress with the 1999 plan had helped earnings per share increase by 20% in 2002 and its main brands achieved the 5-6% target sales growth rate. Like Moremeals however, sales growth had faltered by 2004 and the original 1999 target was abandoned and replaced by a new long-term strategy, 2010 Plan. This promised 50 – 60 plant closures and 20,000 job cuts worldwide. Between 2005 and 2007 Revueline closed or sold off two of its five main UK food plants. In 2009 the existing programme of cuts in jobs and costs was accelerated to ensure completion of restructuring in 2010. One union official summed up to us similar examples from other global food firms during this period in the UK: ‘in global foods, consolidation is the name of the game’.

26Candybrands, certainly consolidated with a 2004 closure programme aimed at shutting 33 factories with 6,000 job losses worldwide. The follow-up, 2007, Programme promised more dismantling: worldwide closures of 11 factories and 7,800 job cuts. The 2008 Annual Report explained this strategy as part of: ‘Our governing objective… to deliver superior shareholder returns.’ The cannibalistic overtones were characterised by the noted BBC economics commentator and business editor, Robert Peston, as: ‘the company is doing to itself what a private equity owner would do’. In the UK in 2005 Candybrands closed its northern UK confectionary plant, acquired by merger in 1993, and in 2007 declared it would phase out all production at another of its oldest British plants by 2009. Financialisation and the drive to convert productive assets into shareholder returns thus emerges as the driving force behind the sectors’ investment and employment policies. But what role, given the enormous scale of job losses and employment insecurity, does CSR play in handling or moderating these changes? Section 3 returns to the latest closures at Candybrands and Mangetout examining in more detail their logic and relationships to both firms CSR policies. But first it is necessary to clarify the wider organisation and scope of CSR and its application in each of the four case study firms.

2. The Scope and Contradictions of Corporate Social Responsibility

27In several global consumer goods sectors, CSR philosophy has had an impact on problems which a business-as-usual orthodoxy might have ignored. These include: multi-stakeholder sustainability and trade partnerships with CSOs, helping marine and forest environments, programmes such as Fair Trade, for economic sustainability for poor producers, and other initiatives which have at least brought problems to the attention of public, media and governmental consciousness (Hartlieb and Jones, 2009). Such willingness to engage with CSO concerns about social, economic and environmental activities involves significant MNC roles as producers, customers or traders, and thus supports the case for CSR as a plausible new form of socio-economic governance (Vogel, 2005, p. 162-163).

28However resulting claims for the emergence of civil society regulation; as an alternative and successor to both Keynsian-welfare and pure, neo-liberal modes of state and market regulation are tempered by critical problems with CSRs relevance and viability. CSR activity tends to be selective and patchy in its application. Provision depends on criteria devised for corporate interests; which may be arbitrary for the relevant societies (Bendell, 2004, p. 17-18). Transparency is often problematic. In countries such as the UK publicly-quoted companies are now required to conform to basic standards in social and environmental reporting; but these still tend to lag behind the scale and scope required for financial accounts. Monitoring and policing of promises and agreements may be weak. Some global companies have managed to improve human and environmental standards in their offshore supply firms; although, even the best of these often fail to guarantee minimal standards in their suppliers operations (Doane, 2002; Pendleton, 2004; Smith, 2007; Vogel, 2005, p. 106-109).

29Over and above these problems with CSR’s candidature as a regulatory institution there are two further and, arguably, more fundamental difficulties for its wider credibility; at least amongst firms with Anglo-Saxon characteristics.Firstly, there is firms’ selective focus on the causes they support. Companies may apply CSR principles to some aspect of their business whilst excluding its application to other more basic aspects. A relevant, seminal case was the historic agreement between the McDonalds fast-food chain and the Environmental Defence Fund NGO; in which McDonalds undertook to replace non-biodegradable packaging in its take-away foods with less toxic materials, while EDF agreed to abstain from criticising wider aspects of McDonalds business; such as allegations of complicity in rainforest destruction (McIntosh et al, 1998). For convenience we refer to this as ‘the inconsistency problem’.

30The second major objection to an expanded business role in social regulation can be termed the two masters contradiction. Originally raised by Milton Friedman it claimed that that significant application of corporate resources to CSR would subtract from the firm’s legal and economic obligations to maximise returns to investors. Diverting resources to CSR, would diminish the overall wealth of society by failing to maximise profits, product values and the level of taxes through which the state, as the legitimate arbiter of a society’s interests, financed its welfare raising activities (Friedman, 1970). (A related critique is that such CSR substitutes for regulatory and social intervention roles of the state, which the latter could otherwise perform more effectively, impartially and comprehensively; Reich, 2008). This two masters problem opposes, on the one hand, shareholdervalue – the onus on privileging financial returns to investors – and, on the other, stakeholder values: meeting the normative expectations of key groups in society.

31CSR defenders rebut key aspects of Friedman’s critique by claiming that CSR still benefits practices and institutions in the wider society but, by focussing on specific priorities, it allows firms to align these with their business priorities. So, it is claimed, CSR activity boosts employee morale, thus improving commitment and reducing labour turnover, and also improves a company’s image amongst investors and consumers. CSR themes can, it is claimed, be woven into marketing priorities and practices so that both society and individual businesses gain from enhanced market success (Porter and Kramer, 2006). This re-alignment of social goals with business priorities results in a more hard-nosed, strategic CSR (McWilliams and Siegel, 2001; Martin, 2002). A stance exemplified by the verdict of a business information agency on one of our case study firms: that its CSR: is not philanthropy or an add-on, but a fundamental part of their business strategy.

32Yet this emphasis only sharpens other contradictions within CSR – particularly the inconsistency problem, just described: supported causes may be arbitrary or selective. Only social and environmental problems coinciding with business priorities receive assistance; no matter what, their importance or urgency in the real world, or compared to adverse consequences of the firm’s business operations; as in the McDonalds-EDF trade off. Moreover the two masters conundrum persists and is intensified in the intensified financialisation of business strategies. If CSR is more aligned with company strategy and strategies are more completely identified with shareholder interests then how free are firms to select and develop CSR commitments? On the evidence of the previous section the parameters for many multi national, or global, corporations business strategies are set by the expectations of the world financial system rather than specific national paradigms or regulatory arrangements. If CSR is integrated into business strategy, is it similarly affected by these pressures? Evidence from our four global food firms helps answer this question.

2. 1. Organising and Applying CSR Priorities

33Many MNCs possess massive potential resources to apply to social and environmental problems. Their high profile in media reports and in consumers’ awareness creates incentives to enhance or repair reputations through publicly visible acts of social responsibility. Commercial success can follow from more positive and carefully marketed images for company and product brands (Banerjee 2007, p. 28-29). But MNCs are complex organisations, with multiple, potential social contributions. So it is important to determine how they allocate and organise their CSR priorities and roles across: countries, issues, and managerial functions (Segal et al, 2003). The further questions investigated for our central issue of employment were as follows. What are food manufacturing multinationals CSR priorities in relation to their employee stakeholders welfare? How do they coordinate implementation of principles and priorities through the organisation, and how are these trans-organisational features manifested in critical episodes such as closures and collective redundancies? As for the nature of their CSR commitments, we asked whether these were primarily commercial, i.e. strategically aligned to marketing and brand image priorities, or derived from less directly commercial commitments to workers and their communities?

2. 2. CSR Priorities in Four Firms

34All of the case firms referred to employee welfare as concerns in their statements of business principles. But the organisation of CSR principles and policies suggested these norms were limited in practice. In the two firms whose closures are analysed in the next section, Mangetout and Candybrands, CSR aims were clearly dominated by food product-related and commercial priorities. A Mangetout report stated that:

“most of the annual donation budget … should be aimed at programmes devoted to nutrition, health and wellbeing of children and youth (plus) pertinent local contributions.”

35While Candybrands simply represented their CSR priorities as equivalent to their concern for market dominance:

“to deliver competitive advantage through assuming leadership positions on issues as diverse as the environment and climate change, health and nutrition, and ethical sourcing.”

36These priorities were reflected in the functional organisation and allocation of CSR. As Table 1 shows, CSR was organised predominantly as a public relations or communications activity.

Table 1 : Location and Scope of CSR in Four Case Study Firms

Firms: Functional organisation





Dedicated CSR function?

No but exec. committee




CSR with C.A./Comms.?





CSR inputs into HRM?

Ad hoc.

Some? PR

Ad hoc.


C.A. = Corporate Affairs; Comms. = Communications; HRM = Human Resource Management; PR = Public Relations
* to manage key external issues as they affect the company and/or its brands

37The table shows that none of these firms had organised their UK CSR activities into a separate organisational function. Nor were they based in functions such as HRM or environmental protection. In each firm CSR’s wider organisational role was reflected in its location; that is Corporate Affairs or Corporate Communications – the departments responsible for maintaining corporate/brand images and reputation. Although Candybrands at least assured that there was a direct line of accountability to a dedicated, executive-level committee. The organisational relationships between CSR and the HRM function were weak. This weakness contradicts commentators who have suggested that the centrality of human resource issues to CSR, and specialised skills, mean that the latter should organise a firm’s CSR activity (Zappalla, 2004) and promote employee welfare. Nor was it the case that central CSR staff supervised or coordinated CSR inputs into HRM activity. Mangetout claimed that its CSR staff would work closely with HR managers to ensure that they incorporated CSR principles in sensitive episodes such as plant closures. But the impression given was that this was mainly to manage potentially negative public relations impacts. A similarly tenuous relationship between the CSR staff and HRM existed in Revueline, while Candybrands and Moremeals provided no evidence that CSR management had systematic inputs into HR practices. Any such inputs were described only as being handled ad hoc, on a case by case basis. Otherwise it was assumed that, at most, HRM managers would observe CSR policies as a result of their own independent, internalisation of the firm’s stated codes and business principles. At Moremeals the criterion for CSR was explicitly to manage key external issues as they affect the company and/or its brands. So unless an employment or HR issue had an external, presumably media-interested, aspect it would not be regarded as a CSR issue. More details on the gaps and limited connections between CSR and HR/employment policies and practices are provided now for each firm and in the analysis of the two major closures in section 3.

2. 3. CSR Principles: Communities and Jobs

38As for the content of CSR in these firms, i.e. the specific social issues and causes which they address, what responsibility do the firms take for their employees and their workplace communities? These latter focuses are especially significant for food firms in Europe and North America, as they have traditionally given special consideration to these stakeholders. In line with the Quaker and other religious origins of some of the owning families, housing, welfare and terms and conditions have been benevolent (Davidoff-Houts and Whitenack, 2004; Dellheim, 1987; Fitzgerald, 1995; Hunnicutt, 1992, p. 195-196; Sidel, 2003). So what happens to these arrangements as companies become global firms with business strategies driven by shareholder value, with corporate responsibility priorities aligned to market aims and brand images? Is the older particularistic business responsibility being displaced by a strategic CSR?

39Statements of ethical codes or business principles in all four cases made reference to the reciprocal rights and responsibilities between the firm and the employee. Yet only one, Candybrands, made explicit connections to employment security and job losses. As Table 2 shows this limited connection between CSR commitments and employment security was accompanied by evidence of a shifting and patchy stance on social obligations to the workplace communities and for traditional welfare support.

Table 2: Traditional & Local Business Responsibilities






Traditional, local welfare?




Yes but reducing

CSR for plant communities?

Yes & continuing


Yes, limited


CSR for closure/ redundancy?

Explicitly No

Only as PR



40Some of the UK plants of all four firms still retained traditional welfare arrangements, occupational benefits, housing assistance, sports and holiday schemes, with support for local community charities and activities. However, aspects of all of these had been substantially eroded at Mangetout. At Revueline the CSR manager aimed to lower the support given to a patchwork of local communities in order to concentrate resources on the broader national and international themes and causes aligned with market-focussed CSR priorities. At Moremeals closures had reduced several of the local commitments down to those surrounding its UK head offices and the one significant British plant still in operation. Candybrand’s occupational, workplace and local community schemes were still active. However, as the next section shows, major closures looked likely to have cut these back by the end of the present decade.

41The picture was even more negative for CSRs potential to influence decisions on plant closures. Redundancies related to closures tended to be well-managed in terms of their implementation and compensation. According to union representatives, compensation levels were reasonable. Relocation was usually offered and appropriate guidance for re-training and job searching was provided from the company’s resources. However, these provisions were fairly similar to the standard collective redundancy packages rolled out by most large firms (Jones and Nisbet, 1999). They were not specifically generated by CSR principles or policies. Only Mangetout had CSR staff sometimes engaged in major redundancy exercises. Yet this involvement was primarily to ensure that redundancies were presented and publicised in line with its CSR image and guidelines for media consumption.

2. 4. Summary

42In domestic employment issues CSR policies in each firms HRM are, at best, assumed to be guided through spontaneous application of ethical codes and business principles by HR managers. CSR staffs inputs into HR handling of redundancies and closures are limited. The organisation of CSR strategies and policy is so specialised and pre-occupied with alignment to public relations and strategic marketing that they have marginal influences on the conduct of corporate HRM. There is also a clear trend away from older, particularistic business responsibility traditions which focussed on occupational welfare and communities. These firms are, in several cases, actively concerned with labour conditions amongst their suppliers in developing countries. However, it seems to be assumed that domestic HR policies and labour regulations - plus the dissemination of ethical codes or business principles - renders a more inclusive CSR irrelevant to the way that workforce levels are managed through the maintenance or closure of operations.

3. CSR Policy and Shareholder Value Strategies in Closure Cases

  • 6  Traveston is a pseudonym.

43Of the four main firms studied, closures at two - Mangetout and Candybrands - were investigated in more detail. The details of these closures help to clarify whether the priorities identified in the relationships between shareholder value imperatives and the related ring-fencing of social commitments did restrict CSR influence on redundancies and closures, and reduce support for traditional forms of social responsibility. Mangetout’s Traveston6 plant had been operating, under one ownership or another, for 100 years at this rural location. In response to corporate demands for greater productivity from all plants to meet output-cost targets, the workforce had had extensive training in SAP (company-wide planning system), Health and Safety, and production process techniques. As a result, output of its main product of mousses (chilled desserts) had been raised by around 10% over seven years. Traveston had gained the status of a high-performance/benchmark plant in the firm’s Europe region. Candybrands had had similar continuity in the locality of its Somerdale factory. Products had been made in the locality for 200 years. Under the former family-firm’s ownership, it had moved to the present, purpose-built greenfield site in 1928. In the 1980s the plant had benefited from investment in computerisation with the production staff similarly upgrading their skills to handle the new technology.

44However, despite their intrinsic efficiency, and the fact that Somerdale supplied the local UK market, both sites were designated for closure by their companies’ rationalisation plans. Traveston’s production was to be shifted to the previously under-performing French plant, described in section 2. Candybrand’s justification for its similar decision to create a completely new facility in Poland was that much lower wage costs would raise profitability - offsetting the extra costs of transporting the packaged product back to its main, UK, market. However, both these cases show not only the subordination of the merits of local production to targets for optimising shareholder value, as well as the shift from local, business responsibility, but also a failure to engage fully with the sustainability ethics of CSR. Candybrand’s Somerdale closure was particularly significant, in this respect, as it denied an opportunity for a stakeholder partnership with the union and local community.

45The rationale for the Traveston closure, announced in March 2004 and completed the following September, was that concentrating production at a few specialist sites would achieve bigger volumes per unit of capital with lower average costs. But, transferring production of chilled deserts to France would mean local British suppliers of services and materials to Traveston would lose business. Local campaigners against the move made much of these losses to the already beleaguered dairy industry and to farmers in the region. The trade union head office and local workforce representatives developed a plausible, alternative business plans for retaining operations at both Somerdale and Traveston. Their plan for the latter envisaged yoghurt production as the platform for other products; such as a Healthy Eating range. It argued that Traveston would be better able to sell to the buoyant, private-label market because the customer loyalty of the image-conscious supermarkets might be threatened by having to import from France. The plan also proposed exporting such new products to the continent. It predicted sufficient gains in the sterling-Euro exchange rate from these exports to fund the necessary product-development and marketing. In tune with contemporary management-think the plan provided ample evidence of an innovative capacity from a flexible workforce.

46Mangetout’s UK Managing Director did agree to a full scale meeting to discuss the Traveston plan with the workers and union representatives; despite admitting that such a dialogue was unprecedented for him. Union representatives reported to us that initially the signs looked hopeful. At one point the meeting was suspended, in classic negotiating style, for a private discussion between the M.D. and the chief union official. But the management still rejected it after just 24 hours of evaluation; because it would not achieve the targeted and unchangeable cost savings. The impacts of the closure were varied. Local union representatives believed that most employees found new employment, but these jobs were, as previous research has found, of lower quality, security and remuneration (Jones and Nisbet, 1999). Local social capital was damaged as previous support for local social organisations and charities was affected; including: regular donations to local Air Ambulance service; a hospice, and sports & leisure facilities. As predicted the regional economy was also hit as demand for milk from the struggling dairy farm sector was reduced.

47At Candybrand’s Somerdale plant the opposition campaign was broader and the alternative plans were more detailed and financially sophisticated. Announced in October 2007 the closure was set for December 2010. It planned to transfer some of the six confectionery brands production to another UK plant and the rest to a new Polish factory. Most of Somerdale’s semi-rural grounds, including the extensive sports fields, would be sold off for redevelopment as housing and light industry units. Initially union negotiators dealt only with Human Resource managers who offered a generous but standard package of redundancy measures: relocation to the firm’s other factories in the UK; enhanced redundancy or early – but unenhanced – retirement payments (40% of the workforce was over 50 years old); retraining and job counselling via an outplacement firm; plus training courses for new skills at a nearby college. Even more severe impacts on local social capital than at Traveston looked likely at Somerdale. These included loss of many sports facilities and down-sizing of a popular social club; ending of close ties and support with the local secondary school and schemes to re-engage homeless people with work at the plant; plus the obvious loss of a staff volunteering system for bodies such as the National Trust. Here in concrete from was proof of a de facto switch of CSR strategy away from traditional community welfare. Most of these social contributions arose from Candybrands’ long-standing philosophy of working with communities

48For a while, however, the community and union campaign looked as though it could prevent outright closure. Prominent local political figures, including the local (New) Labour MP opposed it. Local and regional press provided sympathetic and continuous coverage. Residents and councillors established a fulsome campaign web site. Even more propitious, however, was the sophistication of the union’s counter-plan. Its three main planks were: I) an offer of a CSR-style stakeholder partnership between the wider union, the local community and the company; ii) an alternative plan to achieve equivalent cost savings by redeveloping the site with new products from revamped operations; and iii) a critique of the environmental costs of the company plan to relocate production to Poland.

49The stakeholder component cleverly appealed to, and reworked concepts in CSR philosophy. It propose endorsement of Candybrands’ products to the unions’ 2.1 million members – with a possible wider community of 4 million family members as consumers – plus full cooperation on the redevelopment of the site bringing in local councillors and MPs, if Candybrands would back a new Somerdale plant. On the financial side, the union case pointed out the already proven flexibility of the workforce. By generating an additional 12.4% production without more pay it had already reduced the cost differential advantage of lower Polish labour costs; and further, similar gains could be made by work re-organisation in a redeveloped Somerdale. The union plan retained part of the proposed land-sale for the site but included new, more focussed plant with a more intensive shift pattern than Poland. Voluntary redundancies would reduce present labour costs by 50% to offset the extra capital costs. Further cuts in site costs were envisaged by incorporating a ‘third party’ packing area to lower transport costs. Additional scale economies were proposed for the redeveloped site by bringing an organic chocolate line, presently outsourced from abroad. Playing to the contemporary zeitgeist, the plan argued that such an adoption would appeal to more ethical consumers by marketing the organic product as genuinely local.

50But perhaps the strongest ethical card in the union pack of proposals was the environmental argument against transferring production to Poland. Citing climatic differences between Britain and Poland, it argued that a new plant at Somerdale would have lower heating and cooling requirements. Moreover, as the main market for the Polish output would still be in the UK an updated Somerdale would avoid the emissions from trucking products 2,000 km back to UK. Union calculations put these at 3,421,875 litres of fuel per annum, costing an extra £2.5 mn. p.a. and a ten-fold (2,847,000 Kg) increase of CO2 per year. The union argued that if Candybrands really was as serious about its environmental commitments as its CSR publicity claimed, then it should include the carbon footprint factor in its evaluation. Its green credentials could then be enhanced by redeveloping and re-localising rather than incurring real and image damage through the environmental costs of a move to Poland.

51Superficially, Candybrands’ management seemed to give the union’s counter-plan more consideration than their Mangetout counterparts had to the Traveston alternative scheme. Head office, Human Resources and manufacturing managers met with the local and national union representatives for a whole day and went through two versions of the counter plan. They then subjected the counter-proposals to detailed financial analysis; although this was conducted remarkably quickly over 24 hours. The end result, however, resembled Traveston. Management disputed and corrected several of the unions costings and made the financial parameters the basis for sticking to the original closure plan. They ignored the partnership proposals and its apparent benefits to the company and evaded the carbon-saving, environmental aspects.

52The closure plans and workers’ alternative proposals in both of these cases raised central aspects of business responsibility for employment, local communities and, at Somerdale, for corporate environmental impacts. Yet CSR managers were not involved; either in the closure plans or the consultations and negotiations. The costs and benefit analysis of the closures and redundancies do not seem to have included the worsening of social capital for the local communities. Yet both companies’ corporate codes, principles and CSR policies had specific environmental and community welfare provisions. Although in Mangetout’s case the emphasis was almost completely on the community benefits from their operations in developing societies. In 2008 Candybrands had been commended for showing distinction in their greenhouse gas emissions reporting and their climate change strategies. According to the firm’s chief environmental officer these were increasingly ‘at the heart of all of our business decisions, and… climate change is now a boardroom, and not backroom, issue.’ While his CEO had claimed a year earlier that this means re-thinking the way we do business, embedding sustainability into every decision we take. Yet such controls and principles were seemingly absent in the plans and implementation of the closures.

Summary of Closure Cases

53The contrast between the corporate commitments claimed for stakeholder partnerships and their avoidance in the two closure cases also challenges the value of CSR for social governance. Both companies pepper their CSR statements and reports with references, of varying degrees of clarity, to partnerships with stakeholders. Yet the implicit change partnership offered at Traveston and the detailed, explicit one from the union and community at Somerdale, were ignored or rejected. If such cooperative relationships are central to the civil society regulation promised by CSR then these cases suggest that they will not play a significant role in such critical social developments. Even more important, is what these cases reveal about the character of strategic decision making. Financialised and shareholder value criteria determined the closure programmes; and these proved to be far stronger than the firms’ CSR principles. Even more significantly, in the strategic decision-making procedures, CSR criteria and stakeholder involvement were not introduced at the crucial early and top-level stages when the plans were effectively made unchangeable. Local and divisional management had neither the inspiration nor the authority to deviate from these corporate level plans.

Implications and Conclusions

54Global food and drink corporations are a significant test case for the development and operation of CSR policies within a financialised business paradigm. The evidence from recent years shows that the latter indirectly, but significantly, constrains and limits the scope of the latter. Despite sectoral and national variations such a relationship is likely to prevail elsewhere (Silberhorn and Warren, 2007, p. 359). The evidence presented in this article shows that critical perspectives on the scope and authenticity of CSR in MNCs also need to consider how the business strategies, which follow from financialised priorities of boosting shareholder value firms, impact on the organisation and prioritisation of CSR commitments. The subsumption of CSR roles within management functions such as corporate communications and public relations diverts their focus away from substantive issues about which they profess to care; a deviation compounded by an absence of dedicated direction from specialists at senior levels or engagement with functions such as HRM, which are crucial to CSR aspirations. Such organisational biases tend to reinforce the weighting of CSR criteria into areas favourable to the preferred corporate and market images. Selection of social priorities is thus not determined by the substantive nature or scale of problems – even where these are caused by businesses own activities. Rather, the decisive force in ‘strategic CSR’ is its harmonisation with product and marketing strategies. These, in turn, derive from the bias of financialisation strategies for ‘focussed’ brands and operations, with contribution to shareholder value becoming the criterion for all aspects of a firm’s strategies. Strategic, ultimately financialised, CSR tends to emphasise external and international aspects of corporate operations rather than the ‘internal’ ones such as employment security; or the human and social capital put at risk by closures and international relocations of business operations. In management paradigms these issues are regarded as human resource responsibilities. Yet, in the companies studied here, they have limited CSR salience. Organisational relationships with HRM functions are tenuous; With HR managers expected to absorb the CSR principles through official corporate culture but not to apply social responsibility to lay-offs and closures. There are reports of other European food firms which have, paradoxically, organised CSR around their HR function (Preuss et al, 2009). But in the firms studied here, even this focus would have been negated by the absence of CSR in board-level formulation of business strategies for investment and business restructuring.

55Statements of business principles, explicitly acknowledging the importance of employment policies to limit personal and social hardship and insecurity are applied only to the consequences of policies for redundancies and closures; rather than avoidance of these. They certainly do not moderate the higher-level planning of business restructuring which is thereafter immune to modification on CSR grounds. The general conclusion here is that competitive business strategy for shareholder value dictates rigorous cost controls and frequent divestment of operations and jobs inconsistent with competitive and profitability criteria. When these criteria conflict with clear opportunities to realise virtuous stakeholder commitments, corporations choose to serve the master of shareholder value.

56Senior management responses to workers and unions’ imaginative and sincere alternative plans to closures show that corporate CSR perspectives on stakeholder partnerships are highly selective; confirming the disadvantages of what we called the CSR inconsistency problem. Companies are highly discriminating in the types of stakeholder organisation and cause they accept as partnerships (Jones, 2007; Preuss et al, 2009, p. 969). Stakeholder involvement certainly seems, at the moment, to be incompatible with the financialised decision making in global companies. National regulatory and political environments may influence global companies to act differently in different countries. It was significant that Mangetout chose to shift Traverstons operations to France because closure was seen as more difficult in that country. Closures in France may be seen as more damaging to corporate image than they are in a country like the UK, MNCs may decide that social responsibility is a deterrent to closure (Dieuaide, 2011, p. 91). Nevertheless, whatever the preferred or discounted location the criteria will not be based on intrinsic benefits or costs to the communities and stakeholders affected.

57The sector-wide ranking of these priorities was proven after the completion of our research in relation to the Somerdale closure planned by Candybrands. In a move which attracted national political controversy, this firm was itself subjected to a take-over by another of the MNCs in our sample – Moremeals. Throughout this article we have used these pseudonyms to maintain the pledges of confidentiality given to respondents who supplied information. However, the take-over renders the commitments to Moremeals and Candybrands superfluous. The latter was actually the British-based, Cadbury company; which ceased to exist as an independent entity when the bid by the US-based Kraft corporation (Moremeals) finally succeeded. The significance of the take-over for our story is that Kraft promised to review the closure of Somerdale planned by Cadbury. However after the merger was concluded Kraft announced that it would, after all, complete the closure and transfer to Poland. So, both Kraft and Cadburys rated financial returns above CSR and particularly stakeholder-partnership aspirations.

58In the deal outlined at the beginning of this article by the British Prime Minister, government support for corporate autonomy and de-regulation was conditional upon business contributions and responsibility for carbon reductions, environmental protection, quality of life improvements and supporting your community. (Cameron, 2010). In the closure programmes investigated here such environmental sustainability, social capital and life quality considerations were all sacrificed when they conflicted with financial priorities. So, on the evidence presented here, MNCs are not practising CSR with anything like sufficient consistency to realise Cameron’s ‘deal’ for these kinds of issues. Progressive transcendence of either neo-liberal, socio-economic governance by markets, or welfare regulation by public authorities therefore seems unlikely to be realised by a regime which relies upon corporate responsibility.

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1  Some of this reportage draws on material previously published in Jones and Nisbet (2011).

2  Data on these firmswas collected through documentary analysis of trade union, corporate, and external reports and publications, as well as interviews. The latter included management representatives of all four case study firms, local workforce representatives and national trade union officials, plus community representative such as campaigners and local councillors.

3  The index ofsector globalization measures “how far a firm has developed homogeneous product-market approaches across world macro regions, by dividing the total number of business segments in which the firm operates, outside a companys home region by the total number of business segments within its home region. (So) A globalizing firm would have about the same type and number of businesses in its region of origin as in other regions… “Geographical globalization” measures the scope of a firm’s activity outside its country and macro region of origin… by multiplying two measures: the share of foreign affiliates in the firm’s total number of affiliates; and the proportion of macro regions where the firm's affiliates are established in the total number of world macro regions…” (Palpacuer and Tozanli, 2008, p. 76)



6  Traveston is a pseudonym.

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Bryn Jones et Peter Nisbet, « A Better Model for Socio-economic Governance? », Revue de la régulation [En ligne], 9 | 1er semestre / Spring 2011, mis en ligne le 15 juin 2011, consulté le 26 mars 2017. URL :

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Bryn Jones

Senior Lecturer in Sociology, University of Bath, UK,

Peter Nisbet

Principal Lecturer, Business School, University of West of England, before his tragic death in 2010

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