**Entrepreneurship with Social Responsibility**

**Entrepreneurship with Social Responsibility**

DOI: 10.5772/intechopen.70609

Anna Križanová, Katarína Moravčíková and Jana Klieštiková Jana Klieštiková Additional information is available at the end of the chapter

Anna Križanová, Katarína Moravčíková and

Additional information is available at the end of the chapter

http://dx.doi.org/10.5772/intechopen.70609

#### **Abstract**

[31] Roloff J. Learning from multi-stakeholder networks: Issue-focused stakeholder manage-

[32] Mikkilä M, Toppinen A. Corporate responsibility reporting by large pulp and paper

[33] Mikkilä M. The many faces of responsibility: Acceptability of the global pulp and paper industry in various societies, Dissertationes Forestales 25. Finland: Faculty of Forestry, University of Joensuu; 2006 http://www.metla.fi/dissertationes/df25.pdf [Accessed

[34] Stora Enso. Global Responsibility Report (Helsinki Libris Oy). 2011. http://www. storaenso.com/media-centre/publications/annual-report/Documents/Stora\_Enso\_

[35] Toppinen A, Li N, Tuppura A, Xiong Y. Corporate responsibility and strategic groups in the forest-based industry: Exploratory analysis based on the global reporting initiative (GRI) framework. Corporate Social Responsibility and Environmental Management.

[36] Clarke K. Hazardous ground-cluster munitions and UXO in the Lao PDR, UNDP Lao PDR, Vientiane. 2009. http://www.undplao.org/newsroom/publication/UNDP\_LAO\_

Hazardous%20Ground\_03June2009\_FINAL.pdf [Accessed 9 February, 2014]

Global\_Responsibility\_Report\_2011.pdf [Accessed 9 February 2014]

ment. Journal of Business Ethics. 2008;**82**:233-250

228 Entrepreneurship - Development Tendencies and Empirical Approach

9 February 2014]

2012;**19**:191-205

companies. Forest Policy and Economics. 2008;**10**:500-506

Since the second half of the twentieth century, the society's thinking about the behavior of companies has gradually begun to change. Companies are expected to use their power and finances to influence life around themselves, especially their quality. The corporate social responsibility (CSR) concept is a very progressive management approach that focuses on long-term goals and long-term returns. CSR seeks to harmonize relationships with stakeholders, which the company identifies and implements activities that go beyond legal and ethical standards. A socially responsible company performs something extra volunteer, conducts dialog with its stakeholders, and invests in improving relationships. The Department of Economics of the University of Žilina conducted a marketing survey entitled "Perceptions of Corporate Social Responsibility and its Communication by Companies". The survey was conducted to find out how companies in Slovakia use the CSR concept and what is the level of their communication about this concept in relation to the external environment. Anonymous questionnaire method was used to obtain this data. The method of induction and deduction was used to process the obtained data and the phenomena investigated and to generalize and produce conclusions. Mathematical and statistical methods were used to evaluate survey data, and the synthesis method was used to create recommendations for companies.

**Keywords:** entrepreneurship, corporate social responsibility, Slovak companies

### **1. Introduction**

The issue of corporate social responsibility (CSR) is becoming an increasingly important element of strategic business management under the conditions of today's globalized market. Society expectations of companies' performance are constantly rising. At present, companies have a competitive advantage, that are able to actively respond to ever-changing customer

Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. © 2018 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

© 2016 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons

expectations and implement socially responsible aspects into their business, so that customers perceive the CSR concept as an added value of the company. Companies should feel a certain commitment to advocate for the society in which they operate, because the business sector is part of civil society and they need other members to successful operation. Socially responsible companies strive not only to meet their traditional economic goals but also to fulfill the social and environmental aspects of their activities, in practice, by voluntarily setting high ethical standards, avoiding corruption, trying to minimize the negative impacts of their business on the environment, striving to be good employer, supporting the region in which they operate. They strive to realize on the three main pillars – economic efficiency, environmental responsibility and social engagement – in the long term and as firmly as possible.

• *corporate engagement* – corporate socially responsible enterprises, that create new positive trends in society, have incorporated socially responsible business into their corporate strat-

Entrepreneurship with Social Responsibility http://dx.doi.org/10.5772/intechopen.70609 231

• *systematicity and long-term time horizon* – corporate social responsibility is a long-term issue. The CSR concept should be part of the strategic planning, ongoing monitoring and evaluation of companies. Socially responsible companies are not focused only on shortterm economic goals and profits, but they also focus on long-term goals and long-term

• *credibility –* only trusted social responsibility will enable the company to take full advantage of the benefits of CSR principles and also identifies the four main assumptions for achieving public confidence – individuality, authenticity, transparency, and consistency, • *company operation with respect to the so – "Triple-bottom-line business"* – corporate social responsibility is a modern concept of business that is on three pillars and therefore, as one of the basic ideas emphasizes, that companies should not only focus on maximizing profits and economic growth, but their attention must focus on addressing social and environ-

• *responsibility towards society and companies commitment to contribute to the development of life quality* – corporate responsibility is an ethical imperative to work for the benefit of society.

Corporate social responsibility is a modern business concept that leads to a wider view of business and is built on three basic pillars, so called "triple-bottom-line" – economic, social and environmental pillar [7]. A company that adopts the concept of social responsibility does not only try to achieve profits in its business but its approach is more complex because it takes into account all three pillars and applies voluntarily, over and above its legislative responsibilities, some principles in three basic areas, such as the economic, social, and environmental area [7]. The economic pillar of CSR focuses primarily on company transparency, establishing good relationships with interest groups that affect the economic activity of the company. These are investors, owners, customers, suppliers, business partners, and entities that are significant to a company in this area. Company activities in this area relate to corporate governance, responsible customer access, relationship with suppliers and other business partners, and marketing and advertising [7]. The social area should be divided into two areas – internal and external. The internal area is also called the social policy of the company, and the external area is primarily concerned with philanthropy, altruism, cooperation with the local community. Company social policy and its tools must work towards building a partnership with an employee about that an company thinks as a co-entrepreneur, giving him/her opportunities to exploit his/her active abilities, expanding his/her skills and skills, and achieving business goals by reaching his/her satisfaction. Activities within the framework of internal social policy concern engagement and communication with employees, remuneration for work, education and development, health and safety, work-life balance, outplacement, and equal complexity [8]. The external social area is mainly focused on philanthropy and cooperation with the local

egies and take them into account in creating business values or goals,

sustainability,

mental issues,

**2.1. Fields of corporate social responsibility**

### **2. Corporate social responsibility**

The modern history of corporate socially responsibility began to develop in the 1950s when the ideas of responsible entrepreneurship had fully penetrated the managers' professional literature. Howard R. Bowen, who wrote the book Social Responsibilities of the Businessman in 1953, is considered to be the first theorist of this concept. At the end of the 1960s and 1970s, under the influence of turbulent social change in the western society, and due to the boom of social sciences a number of definitions which were less emphasized by the manager's personality in the corporation, and more focused on the interaction between the company and the socio-economic system. In the 1980s, interest was transferred from the theoretical societal theories of corporate responsibility to empirical research of social responsible companies [1]. Also, due to the attempt to operationalize this concept, it has been fragmentized and various alternative concepts have begun to emerge [2]. At the turn of the millennium, voluntary associations of responsible companies, non-governmental organizations and the European Union contributed to the definition of CSR. The rapid development and wide range of this concept results in a very high terminological disunity, as there is currently no single global definition [3]. Bowen [4] defines social responsibility as "the commitment of entrepreneurs to strive for such strategies, to make such decisions or to perform activities that are desirable in terms of the goals and values of our society." According to the European Union [5], corporate responsibility is "the voluntary integration of social and environmental interests into day-to-day business activities and interactions with business stakeholders". Kotler and Lee [6] define social responsibility as "a commitment to improve the society's well-being through voluntary corporate activities and corporate resources".

Bussard et al. [1] set out the basic characteristics of this concept, highlighting in particular:

#### **2.1. Fields of corporate social responsibility**

expectations and implement socially responsible aspects into their business, so that customers perceive the CSR concept as an added value of the company. Companies should feel a certain commitment to advocate for the society in which they operate, because the business sector is part of civil society and they need other members to successful operation. Socially responsible companies strive not only to meet their traditional economic goals but also to fulfill the social and environmental aspects of their activities, in practice, by voluntarily setting high ethical standards, avoiding corruption, trying to minimize the negative impacts of their business on the environment, striving to be good employer, supporting the region in which they operate. They strive to realize on the three main pillars – economic efficiency, environmental responsi-

The modern history of corporate socially responsibility began to develop in the 1950s when the ideas of responsible entrepreneurship had fully penetrated the managers' professional literature. Howard R. Bowen, who wrote the book Social Responsibilities of the Businessman in 1953, is considered to be the first theorist of this concept. At the end of the 1960s and 1970s, under the influence of turbulent social change in the western society, and due to the boom of social sciences a number of definitions which were less emphasized by the manager's personality in the corporation, and more focused on the interaction between the company and the socio-economic system. In the 1980s, interest was transferred from the theoretical societal theories of corporate responsibility to empirical research of social responsible companies [1]. Also, due to the attempt to operationalize this concept, it has been fragmentized and various alternative concepts have begun to emerge [2]. At the turn of the millennium, voluntary associations of responsible companies, non-governmental organizations and the European Union contributed to the definition of CSR. The rapid development and wide range of this concept results in a very high terminological disunity, as there is currently no single global definition [3]. Bowen [4] defines social responsibility as "the commitment of entrepreneurs to strive for such strategies, to make such decisions or to perform activities that are desirable in terms of the goals and values of our society." According to the European Union [5], corporate responsibility is "the voluntary integration of social and environmental interests into day-to-day business activities and interactions with business stakeholders". Kotler and Lee [6] define social responsibility as "a commitment to improve the society's well-being through voluntary corporate activities and corpo-

Bussard et al. [1] set out the basic characteristics of this concept, highlighting in particular:

mitments that go beyond their obligations defined by the legislative provision,

• *willingness –* socially responsible companies voluntarily develop activities and accept com-

• *active collaboration and open dialog with all stakeholders –* this commitment goes beyond the obligation of companies to behave responsibly towards their shareholders, but also applies to other stakeholders, whether employees, customers, suppliers or local communities,

bility and social engagement – in the long term and as firmly as possible.

**2. Corporate social responsibility**

230 Entrepreneurship - Development Tendencies and Empirical Approach

rate resources".

Corporate social responsibility is a modern business concept that leads to a wider view of business and is built on three basic pillars, so called "triple-bottom-line" – economic, social and environmental pillar [7]. A company that adopts the concept of social responsibility does not only try to achieve profits in its business but its approach is more complex because it takes into account all three pillars and applies voluntarily, over and above its legislative responsibilities, some principles in three basic areas, such as the economic, social, and environmental area [7]. The economic pillar of CSR focuses primarily on company transparency, establishing good relationships with interest groups that affect the economic activity of the company. These are investors, owners, customers, suppliers, business partners, and entities that are significant to a company in this area. Company activities in this area relate to corporate governance, responsible customer access, relationship with suppliers and other business partners, and marketing and advertising [7]. The social area should be divided into two areas – internal and external. The internal area is also called the social policy of the company, and the external area is primarily concerned with philanthropy, altruism, cooperation with the local community. Company social policy and its tools must work towards building a partnership with an employee about that an company thinks as a co-entrepreneur, giving him/her opportunities to exploit his/her active abilities, expanding his/her skills and skills, and achieving business goals by reaching his/her satisfaction. Activities within the framework of internal social policy concern engagement and communication with employees, remuneration for work, education and development, health and safety, work-life balance, outplacement, and equal complexity [8]. The external social area is mainly focused on philanthropy and cooperation with the local community. Philanthropy is understood as a summary of activities that lead to the conscious support of others (individuals, groups, and organizations). It differs from altruism, which is an individual initiative and mostly focuses on the immediate surroundings. Philanthropy tries to solve the problems of the weaker or the handicapped people in a broader context, conceptually and tends to organize itself into the whole care system for these problematic groups. Possible tools for working with the local community can include community support, collaboration with schools, or stakeholder engagement [9]. Environmental issues have become more and more important in recent years. Business leaders should be aware that corporate responsibility in this area is to be applied within the company itself as well as towards the external environment that the company affects in some way, whether it is landscape, noise, resource use, emissions, waste or traffic load. Company activities in the environmental field concern environmental policy, energy and water, waste and recycling, products and packaging and shopping [7].

promote a good idea across the society or in a particular community. A company can realize

Entrepreneurship with Social Responsibility http://dx.doi.org/10.5772/intechopen.70609 233

**Corporate volunteering –** an initiative where a company supports employees, business partners and franchise members to volunteer their time to support local organizations and address social issues. Employees have support from the company to work as volunteers for some time on projects and activities created by company or a non-profit organization with which a company collaborates [11]. Alternatively, they have the opportunity to choose what volunteer initiative they are involved in. Volunteers can provide physical work, training,

**Corporate social responsibility practices –** a company voluntarily carries out business activities and investments that improve the conditions in the local community, whether socially or environmentally. These activities take place mainly within the company and relate to manu-

**Fair trade** – the objective of this partnership between producer and buyer is to support disadvantaged producers in developing countries by controlling fair trade conditions, respecting labor law, not using child labor in production, protecting the environment, but also spreading awareness of the situation of these manufacturers in developed countries. The manufacturer is guaranteed a minimum subscription and the minimum purchase price increased by the so called a social surcharge, which will ensure a fair price that could otherwise not be

**Outplacement** – support and assistance in placement of redundant workers on the labor mar-

For many companies, CSR is a means to improve the image, competitive advantage, or differentiation. CSR is participated to creating value for the company as well as branding and builds customer loyalty and behavior after purchase. According to Hansen company, it is the reward for a company to stimulate customer buying behavior. The customer is the central determinant of who will be "rewarded" and who will be "punished". Through his/her purchasing decisions influences the profit of companies which compete on the market and indirectly also the direction the economy is taking are affected. Not only companies get benefits from CSR. Stakeholders also became the profit parties [12]. The most important benefits for companies implementing CSR concept ideas in their day-to-day practice are cited by several

*CSR contributes to creating a good business environment –* employees feel more involved with the company, increase their confidence in decision-making, motivation and productivity [13]. *CSR increases attraction for investors –* investors are interested in corporate CSR performance

indicators that would support their decision to provide financial assistance [14].

activities related to corporate philanthropy along with nonprofit organizations.

facturing processes, employee development and behavior. Kuldova [3] assigns two other tools to these tools, namely:

ket. The aim is to mitigate the negative effects of redundancies.

**2.3. Benefits and deficiencies of corporate social responsibility**

teaching or counseling.

achieved.

authors:

#### **2.2. Tools of corporate social responsibility**

Kotler and Lee [6] outline six CSR tools that can help society to promote society's health, security, education and employment, improve the environment, social and economic development, and other basic human needs and desires. Support can take place in a variety of forms – from grants, paid advertising, through sponsorship, technical expertise, material contributions, business volunteers to access to distribution channels. These tools include:

**Campaigns expanding awareness about social issue –** the company develop an initiative to raise awareness and, above all, the public's interest in social issue through campaigns, and to persuade it to support them by donating time, volunteering, financial or non-financial gifts. It uses research publishing, statistics, encourages proactive access, and effort to learn about the issue additional information in brochures or websites. This activity is carried out by the enterprise itself or cooperates with nonprofit organizations that address this issue.

**Cause-related marketing –** marketing activities associated with a publicly beneficial project. A company spends a certain amount of revenue from a particular product on a social or nonprofit organization. At the same time, it tries to wake up the buyer's interest, which increases the revenues of the company and also the non-profit organization. Campaigns of this type are usually conducted only for a short period of time [10]. A company should try to make its behavior and initiatives as authentic and trustworthy as possible.

**Social marketing –** represents the development and implementation of a behavioral change campaign that aims to improve public health, safety, the environment, or the welfare of society. These campaigns mostly focus on health issues (breast cancer, prostate cancer, and eating disorders), accident prevention (traffic safety), environmental problems (electricity savings and air pollution) and public involvement issues (blood donation and animal rights).

**Corporate philanthropy –** direct contribution by a company to charity or a social problem, most often in the form of cash grants, subsidies, or contributions in kind. Corporate philanthropy is the promotion of publicly beneficial projects beyond the company activity to promote a good idea across the society or in a particular community. A company can realize activities related to corporate philanthropy along with nonprofit organizations.

**Corporate volunteering –** an initiative where a company supports employees, business partners and franchise members to volunteer their time to support local organizations and address social issues. Employees have support from the company to work as volunteers for some time on projects and activities created by company or a non-profit organization with which a company collaborates [11]. Alternatively, they have the opportunity to choose what volunteer initiative they are involved in. Volunteers can provide physical work, training, teaching or counseling.

**Corporate social responsibility practices –** a company voluntarily carries out business activities and investments that improve the conditions in the local community, whether socially or environmentally. These activities take place mainly within the company and relate to manufacturing processes, employee development and behavior.

Kuldova [3] assigns two other tools to these tools, namely:

community. Philanthropy is understood as a summary of activities that lead to the conscious support of others (individuals, groups, and organizations). It differs from altruism, which is an individual initiative and mostly focuses on the immediate surroundings. Philanthropy tries to solve the problems of the weaker or the handicapped people in a broader context, conceptually and tends to organize itself into the whole care system for these problematic groups. Possible tools for working with the local community can include community support, collaboration with schools, or stakeholder engagement [9]. Environmental issues have become more and more important in recent years. Business leaders should be aware that corporate responsibility in this area is to be applied within the company itself as well as towards the external environment that the company affects in some way, whether it is landscape, noise, resource use, emissions, waste or traffic load. Company activities in the environmental field concern environmental policy, energy and water, waste and recycling, products and packag-

Kotler and Lee [6] outline six CSR tools that can help society to promote society's health, security, education and employment, improve the environment, social and economic development, and other basic human needs and desires. Support can take place in a variety of forms – from grants, paid advertising, through sponsorship, technical expertise, material contribu-

**Campaigns expanding awareness about social issue –** the company develop an initiative to raise awareness and, above all, the public's interest in social issue through campaigns, and to persuade it to support them by donating time, volunteering, financial or non-financial gifts. It uses research publishing, statistics, encourages proactive access, and effort to learn about the issue additional information in brochures or websites. This activity is carried out by the enterprise itself or cooperates with nonprofit organizations that address

**Cause-related marketing –** marketing activities associated with a publicly beneficial project. A company spends a certain amount of revenue from a particular product on a social or nonprofit organization. At the same time, it tries to wake up the buyer's interest, which increases the revenues of the company and also the non-profit organization. Campaigns of this type are usually conducted only for a short period of time [10]. A company should try to make its

**Social marketing –** represents the development and implementation of a behavioral change campaign that aims to improve public health, safety, the environment, or the welfare of society. These campaigns mostly focus on health issues (breast cancer, prostate cancer, and eating disorders), accident prevention (traffic safety), environmental problems (electricity savings

**Corporate philanthropy –** direct contribution by a company to charity or a social problem, most often in the form of cash grants, subsidies, or contributions in kind. Corporate philanthropy is the promotion of publicly beneficial projects beyond the company activity to

and air pollution) and public involvement issues (blood donation and animal rights).

tions, business volunteers to access to distribution channels. These tools include:

behavior and initiatives as authentic and trustworthy as possible.

ing and shopping [7].

this issue.

**2.2. Tools of corporate social responsibility**

232 Entrepreneurship - Development Tendencies and Empirical Approach

**Fair trade** – the objective of this partnership between producer and buyer is to support disadvantaged producers in developing countries by controlling fair trade conditions, respecting labor law, not using child labor in production, protecting the environment, but also spreading awareness of the situation of these manufacturers in developed countries. The manufacturer is guaranteed a minimum subscription and the minimum purchase price increased by the so called a social surcharge, which will ensure a fair price that could otherwise not be achieved.

**Outplacement** – support and assistance in placement of redundant workers on the labor market. The aim is to mitigate the negative effects of redundancies.

#### **2.3. Benefits and deficiencies of corporate social responsibility**

For many companies, CSR is a means to improve the image, competitive advantage, or differentiation. CSR is participated to creating value for the company as well as branding and builds customer loyalty and behavior after purchase. According to Hansen company, it is the reward for a company to stimulate customer buying behavior. The customer is the central determinant of who will be "rewarded" and who will be "punished". Through his/her purchasing decisions influences the profit of companies which compete on the market and indirectly also the direction the economy is taking are affected. Not only companies get benefits from CSR. Stakeholders also became the profit parties [12]. The most important benefits for companies implementing CSR concept ideas in their day-to-day practice are cited by several authors:

*CSR contributes to creating a good business environment –* employees feel more involved with the company, increase their confidence in decision-making, motivation and productivity [13].

*CSR increases attraction for investors –* investors are interested in corporate CSR performance indicators that would support their decision to provide financial assistance [14].

*CSR builds trust and good name of company as well as brands from the perspective of the customers –* the resulting image that the public creates about a company is emerging as a mosaic of many features and attributes, including engagement in individual areas of CSR [14].

to support corporate activities in their community. The goal is to communicate CSR progress in a meaningful way that will have a positive impact on the company and will attract stakeholders. CSR communication can provide additional benefits to a company, namely a higher level of customer satisfaction and loyalty, a better reputation for the company, brand and product, more motivated and productive employees, better relationships with the community and public authorities, or better access to finance [15]. CSR communication can include information on the production of safe and quality products/services, on keeping customer satisfaction, early invoicing, local supplier support, information beyond the company's core business, honest price information, adherence to marketing and advertising ethics, and consumer rights beyond the purchasing contract, hard criteria for the selection of business partners or information on working and living conditions [14]. The tools, means, channels and media through which the company can communicate its CSR initiatives and activities with external stakeholders include the CSR report, information packages, POS materials, vendor training, events, website, social media, brochures, newsletters, mailing lists, and advertising

Entrepreneurship with Social Responsibility http://dx.doi.org/10.5772/intechopen.70609 235

**3. Entrepreneurship with social responsibility in Slovakia**

Corporate social responsibility has been actively promoted in Slovakia since 2000, especially by non-governmental organizations that have since remained the main advocates of this concept at national level. The key carriers of the CSR concept with the largest commitment to promoting CSR in practice are multinational corporations in the Slovak business sector.

The Department of Economics of the University of Žilina conducted a survey among the representatives of companies in Slovakia entitled "Perceptions of Corporate Social Responsibility from the perspective of companies in Slovakia". The survey was conducted electronically via e-mail between October and December 2016 on a total sample of 434 companies randomly selected from a database of companies operating in Slovakia. Respondents were business owners, business executives, CSR employees, marketing department staff, and PR department staff. Most micro-companies participated in the survey, i.e. enterprises with fewer than 10 employees, namely 63.4%, followed by small companies (22.4%), large companies (8.1%) and medium-sized companies (6.2%). In terms of existence, most companies was category 6–10 years old (29.3%) and 21 and more years old (27.2%). Within the legal form, the largest representation had the commercial corporation (82.7%), of which 93% were limited companies. In terms of industry, retail and wholesale (21%) and information and communications

The results of the survey show that the concept of Corporate Social Responsibility is known to Slovak companies, as 68.7% of respondents stated this fact. Companies in Slovakia also know economic, environmental and social responsibility terms, as 75.6% of the companies surveyed expressed their positive opinion. Most Slovak companies are socially responsibly. In our survey, 83.9% of the respondents expressed a positive opinion from the total number of companies, with 39.4% of respondents saying "definitely yes" and 44.5% of answers "probably yes" (**Figure 1**).

media [12, 15, 16].

(14.7%) had the largest representation.

*CSR allows to gain a competitive advantage and increase customer loyalty –* CSR activities can be seen as a distinctive element from the competition through which the company can reach a potentially interesting group of people who appreciate these activities and they are willing to pay more for a socially responsible product [6].

*CSR reduces costs –* most CSR activities require company funding. On the other hand, CSR activities are linked to innovations that can help the company reduce costs and increase efficiency [13].

*CSR improves risk management and reduces the cost of risk management –* applying CSR to day-today company practices brings to companies better risk management, reducing the risks in the environmental, economic or even media field [14].

*CSR can attract new partners –* potential business partners consider for long-term cooperation not only prices but also other factors such as product quality, ability to deliver goods on time and in the right place, solvency and payment terms in business [13].

*CSR allows to become a "preferred supplier" –* companies can become required suppliers through active access to responsible business [13].

*CSR allows to increase the performance of the supplier-customer relationship –* responsible access to partners contributes to building mutual trust, improving the quality of products and services and, ultimately, to achieving higher profits within the framework of business cooperation [6].

In spite of all the benefits, however, a company must also take into account the obstacles that may prevent it from putting the CSR concept into practice. The most common obstacles include [1]:

#### **2.4. CSR communication**

Communication about CSR initiatives and performance is a critical factor for successful companies. This type of communication provides information to interest groups who are interested in buying the products of this company, want to invest into this company, or want to support corporate activities in their community. The goal is to communicate CSR progress in a meaningful way that will have a positive impact on the company and will attract stakeholders. CSR communication can provide additional benefits to a company, namely a higher level of customer satisfaction and loyalty, a better reputation for the company, brand and product, more motivated and productive employees, better relationships with the community and public authorities, or better access to finance [15]. CSR communication can include information on the production of safe and quality products/services, on keeping customer satisfaction, early invoicing, local supplier support, information beyond the company's core business, honest price information, adherence to marketing and advertising ethics, and consumer rights beyond the purchasing contract, hard criteria for the selection of business partners or information on working and living conditions [14]. The tools, means, channels and media through which the company can communicate its CSR initiatives and activities with external stakeholders include the CSR report, information packages, POS materials, vendor training, events, website, social media, brochures, newsletters, mailing lists, and advertising media [12, 15, 16].

### **3. Entrepreneurship with social responsibility in Slovakia**

*CSR builds trust and good name of company as well as brands from the perspective of the customers –* the resulting image that the public creates about a company is emerging as a mosaic of many

*CSR allows to gain a competitive advantage and increase customer loyalty –* CSR activities can be seen as a distinctive element from the competition through which the company can reach a potentially interesting group of people who appreciate these activities and they are willing to

*CSR reduces costs –* most CSR activities require company funding. On the other hand, CSR activities are linked to innovations that can help the company reduce costs and increase effi-

*CSR improves risk management and reduces the cost of risk management –* applying CSR to day-today company practices brings to companies better risk management, reducing the risks in the

*CSR can attract new partners –* potential business partners consider for long-term cooperation not only prices but also other factors such as product quality, ability to deliver goods on time

*CSR allows to become a "preferred supplier" –* companies can become required suppliers through

*CSR allows to increase the performance of the supplier-customer relationship –* responsible access to partners contributes to building mutual trust, improving the quality of products and services and, ultimately, to achieving higher profits within the framework of business cooperation [6].

In spite of all the benefits, however, a company must also take into account the obstacles that may prevent it from putting the CSR concept into practice. The most common obstacles

• adopting a corporate socially responsibility into a company strategy is a costly entry

• CSR is characterized by its own language and covers all areas of company, from product design through management of all components of the company to external communication, • CSR is based on the mutual cooperation of all three sectors of society. Some companies may

• unclear standards and tangles of codes applicable to different areas of activity may result in a conflict of priorities in meeting the objectives of a responsible business strategy.

Communication about CSR initiatives and performance is a critical factor for successful companies. This type of communication provides information to interest groups who are interested in buying the products of this company, want to invest into this company, or want

features and attributes, including engagement in individual areas of CSR [14].

pay more for a socially responsible product [6].

234 Entrepreneurship - Development Tendencies and Empirical Approach

environmental, economic or even media field [14].

active access to responsible business [13].

and in the right place, solvency and payment terms in business [13].

be afraid to find trusted and proportionate partners to work with.

ciency [13].

include [1]:

investment,

**2.4. CSR communication**

Corporate social responsibility has been actively promoted in Slovakia since 2000, especially by non-governmental organizations that have since remained the main advocates of this concept at national level. The key carriers of the CSR concept with the largest commitment to promoting CSR in practice are multinational corporations in the Slovak business sector.

The Department of Economics of the University of Žilina conducted a survey among the representatives of companies in Slovakia entitled "Perceptions of Corporate Social Responsibility from the perspective of companies in Slovakia". The survey was conducted electronically via e-mail between October and December 2016 on a total sample of 434 companies randomly selected from a database of companies operating in Slovakia. Respondents were business owners, business executives, CSR employees, marketing department staff, and PR department staff. Most micro-companies participated in the survey, i.e. enterprises with fewer than 10 employees, namely 63.4%, followed by small companies (22.4%), large companies (8.1%) and medium-sized companies (6.2%). In terms of existence, most companies was category 6–10 years old (29.3%) and 21 and more years old (27.2%). Within the legal form, the largest representation had the commercial corporation (82.7%), of which 93% were limited companies. In terms of industry, retail and wholesale (21%) and information and communications (14.7%) had the largest representation.

The results of the survey show that the concept of Corporate Social Responsibility is known to Slovak companies, as 68.7% of respondents stated this fact. Companies in Slovakia also know economic, environmental and social responsibility terms, as 75.6% of the companies surveyed expressed their positive opinion. Most Slovak companies are socially responsibly. In our survey, 83.9% of the respondents expressed a positive opinion from the total number of companies, with 39.4% of respondents saying "definitely yes" and 44.5% of answers "probably yes" (**Figure 1**).

has five phases: defensive, charitable, promotional, strategic and system phase. A large number of respondents (45.6%) could not determine the phase of their company. Of the companies that could identify it, 15% said the charity phase, 13.4% promotional phase, 10.1% strategic phase, 9% system phase and 6.9% defensive phase. The respondents were also asked to determine the impact of CSR implementation on their customer relationships. Two-fifths of them said that CSR had a positive impact on customer relationships, with 4.6% of respondents reporting a significant impact. More than two-fifths were unable to determine the impact of CSR on their customer relationships and the negative impact did not come from any respon-

Entrepreneurship with Social Responsibility http://dx.doi.org/10.5772/intechopen.70609 237

Companies in Slovakia (26.5%) inform their external environment about their CSR activities and projects in very small extend. These companies use mainly the Internet (18.7%) and social networks (14.7%) to communicate with their external environment. The least used tool for

In the case of changing or expanding the information tools for external environment about CSR activities and projects, the respondent stated in particular an internet site (28.6%) and social networks (15%). In this case, the least considered tool is the CSR report (3.7%) and newspaper articles (4.6%). Nearly two-fifths respondent do not consider about changing or

On the basis of the above, it is possible to state that the companies in Slovakia know the CSR concept and the majority of companies are involved in activities related to the CSR concept, but they do not pay more attention to it because a large part of the companies cannot determine the phase of CSR in which they are located and they do not know the impact of this concept for relationships with their customers. They cannot make full use of the benefits of the CSR concept, because only a very small part of Slovak companies communicate information

Based on the survey results, we wanted to determine whether socially responsible behavior

*Hypothesis 1:* There is no statistically significant dependence between the size of the company

depended on selected company dentification data. We have set three hypotheses:

**Figure 3.** Impact of CSR company strategy in Slovakia on customer relationships. Source: authors.

in the Slovak Republic and its socially responsible behavior.

informing about CSR activities and projects is the CSR report (**Figure 4**).

dent (**Figure 3**).

expanding of tools (39.9%).

about their CSR activities and projects.

**Figure 1.** Expressions of Slovakia companies, whether they are socially responsible. Source: authors.

The survey also shows that almost half (43.5%) of surveyed companies are involved in all three areas of corporate social responsibility. In two areas are 25.8% of companies and only 19.8% of companies are involved in one. Although the elaboration of the CSR strategy is a crucial step, because it analyzes the stakeholders and identifies the key areas of CSR, only 11.1% of the companies addressed have a written CSR strategy and up to 82.3% do not have this strategy. Respondents consider the most important manifestation of their corporate social responsibility, in particular achieving the profits in an honest and ethical manner, namely 38.7%. Other important manifestations include employee care (18.4%), compliance with statutory standards and tax payments (13.6%) and the provision of quality products at a reasonable price (13.4%) (**Figure 2**).

The reason, why companies behave in a socially responsible way, the management's internal conviction was most often mentioned (50%), followed by efforts to improve relations with interested groups (7.6%) or better customer relations (7.8%). Corporate social responsibility

**Figure 2.** Reasons why companies in Slovakia behave socially responsible. Source: authors.

has five phases: defensive, charitable, promotional, strategic and system phase. A large number of respondents (45.6%) could not determine the phase of their company. Of the companies that could identify it, 15% said the charity phase, 13.4% promotional phase, 10.1% strategic phase, 9% system phase and 6.9% defensive phase. The respondents were also asked to determine the impact of CSR implementation on their customer relationships. Two-fifths of them said that CSR had a positive impact on customer relationships, with 4.6% of respondents reporting a significant impact. More than two-fifths were unable to determine the impact of CSR on their customer relationships and the negative impact did not come from any respondent (**Figure 3**).

Companies in Slovakia (26.5%) inform their external environment about their CSR activities and projects in very small extend. These companies use mainly the Internet (18.7%) and social networks (14.7%) to communicate with their external environment. The least used tool for informing about CSR activities and projects is the CSR report (**Figure 4**).

In the case of changing or expanding the information tools for external environment about CSR activities and projects, the respondent stated in particular an internet site (28.6%) and social networks (15%). In this case, the least considered tool is the CSR report (3.7%) and newspaper articles (4.6%). Nearly two-fifths respondent do not consider about changing or expanding of tools (39.9%).

The survey also shows that almost half (43.5%) of surveyed companies are involved in all three areas of corporate social responsibility. In two areas are 25.8% of companies and only 19.8% of companies are involved in one. Although the elaboration of the CSR strategy is a crucial step, because it analyzes the stakeholders and identifies the key areas of CSR, only 11.1% of the companies addressed have a written CSR strategy and up to 82.3% do not have this strategy. Respondents consider the most important manifestation of their corporate social responsibility, in particular achieving the profits in an honest and ethical manner, namely 38.7%. Other important manifestations include employee care (18.4%), compliance with statutory standards and tax payments (13.6%) and the provision of quality products at a reason-

**Figure 1.** Expressions of Slovakia companies, whether they are socially responsible. Source: authors.

236 Entrepreneurship - Development Tendencies and Empirical Approach

**Figure 2.** Reasons why companies in Slovakia behave socially responsible. Source: authors.

The reason, why companies behave in a socially responsible way, the management's internal conviction was most often mentioned (50%), followed by efforts to improve relations with interested groups (7.6%) or better customer relations (7.8%). Corporate social responsibility

able price (13.4%) (**Figure 2**).

On the basis of the above, it is possible to state that the companies in Slovakia know the CSR concept and the majority of companies are involved in activities related to the CSR concept, but they do not pay more attention to it because a large part of the companies cannot determine the phase of CSR in which they are located and they do not know the impact of this concept for relationships with their customers. They cannot make full use of the benefits of the CSR concept, because only a very small part of Slovak companies communicate information about their CSR activities and projects.

Based on the survey results, we wanted to determine whether socially responsible behavior depended on selected company dentification data. We have set three hypotheses:

*Hypothesis 1:* There is no statistically significant dependence between the size of the company in the Slovak Republic and its socially responsible behavior.

**Figure 3.** Impact of CSR company strategy in Slovakia on customer relationships. Source: authors.

**Figure 4.** Communication channels by which companies in Slovakia inform about CSR. Source: authors.

*Hypothesis 2:* There is no statistically significant dependence between the existence of the company in the Slovak Republic and its socially responsible behavior.

be argued that there is no statistically significant dependence between the legal form of the company and whether the company is socially responsible in the Slovak Republic (**Figure 7**).

Entrepreneurship with Social Responsibility http://dx.doi.org/10.5772/intechopen.70609 239

With regard to the results of the verification of statistical hypotheses, it can be stated that company identification data such as size, existence and legal form of an company do not affect whether the company is social responsible. In this case, the company's decision on whether to be or not to be socially responsible depends on the internal conviction of management.

Unlike Slovak companies most companies in Malta have developed a CSR strategy and identified the brand's reputation as a keynote. The concept of CSR has a relatively large impact on the economy and society in Central European countries, where CSR concept will become a more mature in the future and more and more companies will be implementing it according to corporate representatives. They also identified the main issues and the most useful tools in

**4. Entrepreneurship with social responsibility in abroad**

**Figure 5.** Calculation of hypothesis testing 1. Source: authors.

**Figure 6.** Calculation of hypothesis testing 2. Source: authors.

**Figure 7.** Calculation of hypothesis testing 3. Source: authors.

implementing CSR and the most important benefits of the concept.

*Hypothesis 3:* There is no statistically significant dependence between the legal form of the company in the Slovak Republic and its socially responsible behavior.

To verify the statistical hypotheses, the x2-independent test was used and we used the SPSS software 16.0 to calculate it. At the chosen x2 – independence test, the zero hypothesis is rejected if the P-value is below the significance level. If the P-value is equal or higher than the significance level, we cannot reject the zero hypothesis. The difference can only be the result of choice and there is no relationship between the variables. We determined the level of significance of the test α = 0.05. We take into account the Pearson Chi-square value when verifying the hypotheses through the x2 – independence test and the p-value of the test is in the tables labeled Asymp. Sig.

We found that the P-value is higher than the chosen significance level when testing the first hypothesis. It means that H0 is not objectionable. We can argue that there is no statistically significant dependence between the size of the enterprise and whether the company is socially responsible in the Slovak Republic (**Figure 5**).

In the second hypothesis we found in the test that the P-value is higher than the chosen significance level. It means that H0 is not objectionable. We can argue that there is no statistically significant dependence between the existence of the company and whether the company is socially responsible in the Slovak Republic (**Figure 6**).

Based on the results of x2 – the independence test we found in the third hypothesis that the P-value is higher than the chosen significance level. It means that H0 is not objectionable. It can

**Figure 5.** Calculation of hypothesis testing 1. Source: authors.

**Figure 6.** Calculation of hypothesis testing 2. Source: authors.

*Hypothesis 2:* There is no statistically significant dependence between the existence of the com-

**Figure 4.** Communication channels by which companies in Slovakia inform about CSR. Source: authors.

*Hypothesis 3:* There is no statistically significant dependence between the legal form of the

To verify the statistical hypotheses, the x2-independent test was used and we used the SPSS software 16.0 to calculate it. At the chosen x2 – independence test, the zero hypothesis is rejected if the P-value is below the significance level. If the P-value is equal or higher than the significance level, we cannot reject the zero hypothesis. The difference can only be the result of choice and there is no relationship between the variables. We determined the level of significance of the test α = 0.05. We take into account the Pearson Chi-square value when verifying the hypotheses through the x2 – independence test and the p-value of the test is in

We found that the P-value is higher than the chosen significance level when testing the first hypothesis. It means that H0 is not objectionable. We can argue that there is no statistically significant dependence between the size of the enterprise and whether the company is socially

In the second hypothesis we found in the test that the P-value is higher than the chosen significance level. It means that H0 is not objectionable. We can argue that there is no statistically significant dependence between the existence of the company and whether the company is

Based on the results of x2 – the independence test we found in the third hypothesis that the P-value is higher than the chosen significance level. It means that H0 is not objectionable. It can

pany in the Slovak Republic and its socially responsible behavior.

238 Entrepreneurship - Development Tendencies and Empirical Approach

the tables labeled Asymp. Sig.

responsible in the Slovak Republic (**Figure 5**).

socially responsible in the Slovak Republic (**Figure 6**).

company in the Slovak Republic and its socially responsible behavior.

be argued that there is no statistically significant dependence between the legal form of the company and whether the company is socially responsible in the Slovak Republic (**Figure 7**).

With regard to the results of the verification of statistical hypotheses, it can be stated that company identification data such as size, existence and legal form of an company do not affect whether the company is social responsible. In this case, the company's decision on whether to be or not to be socially responsible depends on the internal conviction of management.

**Figure 7.** Calculation of hypothesis testing 3. Source: authors.

### **4. Entrepreneurship with social responsibility in abroad**

Unlike Slovak companies most companies in Malta have developed a CSR strategy and identified the brand's reputation as a keynote. The concept of CSR has a relatively large impact on the economy and society in Central European countries, where CSR concept will become a more mature in the future and more and more companies will be implementing it according to corporate representatives. They also identified the main issues and the most useful tools in implementing CSR and the most important benefits of the concept.

PWC company [17] has launched a survey called "Corporate Responsibility Practices Survey" in Malta in the first quarter to find out how companies in Malta have a sense of CSR and how they evaluate its practices. The survey included 45 questions and assesses: internal and external awareness, social responsibility and regulation, compliance and disclosures. Participation in this survey was open to all companies in Malta. The survey covered a wide range of sectors. The financial and insurance sector was actively involved in this survey, followed by manufacturing and information and communication sectors. In terms of size, a large part of companies was with a staff of 10–50 (26%) and a staff of 100–250 (26%) and the smallest part of companies was with a staff of 300–500 (4%). In terms of turnover, the most involved companies most had annual turnover of 0–2 mil. € (28%) and companies with a turnover of 10–20 mil. € (14%). Companies with an annual turnover of 2–5 mil. €, 5–10 mil. €, 50–100 mil. €, 100 and more had a similar 12%. The smallest representation had companies with a turnover of 20–50 mil. € [17].

The survey results show that 60% of companies have a CSR strategy or program, 38% expressed negative, and 2% have not been able to comment. Nearly half of the participants (48%) claim to have a department identified as responsible for corporate responsibility. This function appears to be the most common within the Public Relations/Marketing Department or the responsibility of a dedicated CSR team established for this purpose [17].

Participant companies feel strongly about the impact of corporate behavior on their image and brand reputation (70%). Companies state that this is not motivated by their stakeholders (18%). It is clear that stakeholders are not yet as influential as in other countries when it comes to expectations of responsible behavior. The drivers for action on corporate responsibility are mostly internal forces arising from the company's corporate values (58%) and the belief that they should do their part for the environment and the community (68%) [17] (**Figure 8**).

respondents did not agree and 2% did not comment on this issue. The results of the survey showed how the position of the CSR will develop from the point of view of the representatives of the addressed companies. The possibility that the concept will become more ripe, as the business model will include social and environmental problems, was highlighted by company representatives from Romania (50%), Serbia (41%) and Lithuania (41%). The possibility that the concept will go ahead and more and more companies will implement it, officials from Bulgaria (60%), Lithuania (59%) and Slovakia (58%) said. The possibility that the concept of CSR will have the same position was highlighted by representatives from Czech (42%), Hungarian (35%) and Slovak (32%) companies. The question was not answered in particular by Hungarians (10%), Romanians (8%) and Slovenia (8%). As the main problem that will hinder the implementation of CSR in individual countries over the next 15 years, corporate representatives have identified "perceptions of CSR as sponsorship", which has been identified by 59% of representatives. Other problems include "lack of government incentives" (52%), "company reluctance to invest" (46%), "lack of communication with the public" (35%) or "insufficient consumer pressure" (24%). In the opinion of the CSR managers polled, the most useful in CSR implementation are tools and methods enabling employee involvement such as corporate volunteering (36%), ethical programmes for employees (29%) or dialog with stakeholders (35%). Respondents also named social campaigns (29%) and pro-ecological programmes (29%) as useful initiatives. Managers pointed to socially responsible investing (40%) and inter-sectorial cooperation (32%) as tools that are underused and worth popularizing. Sustainability and CSR activities bring internal and external benefits to companies. According to the respondents, internally they ensure a stronger employee involvement (65%) and a better ethical awareness (46%). Externally, they improve the companies' reputation (65%) and recognition of the brand as socially respon-

Entrepreneurship with Social Responsibility http://dx.doi.org/10.5772/intechopen.70609 241

**Figure 8.** Main driving forces behind Malta companies' CSR efforts. Source: PWC company [17].

sible (51%) [18] (**Figure 9**).

At present, for 58% of companies the implementation of the CSR concept in their company is very important and 2% is even extremely important. In the next 5 years, this state of affairs will change and for 56% will be very important and for even 20% of companies will be extremely important. By contrast, 34% of companies said that CSR for their company is neither important nor unimportant and for 6% is very unimportant. In the next 5 years, this situation should change, as for 20% of companies CSR will be neither important nor unimportant and very unimportant for just 4% of businesses [17].

In 2015, Deloitte company [18] conducted a survey called "CSR managers in Central Europe" to find out how the CSR concept has an impact on the economy and society in the Central European countries. This is the first survey to uncover CSR practices in 10 Central European countries, namely Bulgaria, the Czech Republic, Kosovo, Lithuania, Latvia, Romania, Serbia, Slovakia, Slovenia and Hungary. The survey was conducted from July to September 2015 and 179 company representatives from 10 Central European countries expressed views on it. In terms of size, most enterprises with a total of 250 or more employees (63.1%) were involved in the survey. The majority of companies surveyed have a CSR concept implemented within 5 years (60.9%), almost a third (27.9%) from 5 to 10 years and 10.6% of companies over 10 years.

According to this survey, 84% of respondents think that their business has contributed to addressing the country's social problems in recent years. Thirty-six percent of respondents definitely agree with this argument and 48% rather agree. On the other hand, 13% of the

**Figure 8.** Main driving forces behind Malta companies' CSR efforts. Source: PWC company [17].

PWC company [17] has launched a survey called "Corporate Responsibility Practices Survey" in Malta in the first quarter to find out how companies in Malta have a sense of CSR and how they evaluate its practices. The survey included 45 questions and assesses: internal and external awareness, social responsibility and regulation, compliance and disclosures. Participation in this survey was open to all companies in Malta. The survey covered a wide range of sectors. The financial and insurance sector was actively involved in this survey, followed by manufacturing and information and communication sectors. In terms of size, a large part of companies was with a staff of 10–50 (26%) and a staff of 100–250 (26%) and the smallest part of companies was with a staff of 300–500 (4%). In terms of turnover, the most involved companies most had annual turnover of 0–2 mil. € (28%) and companies with a turnover of 10–20 mil. € (14%). Companies with an annual turnover of 2–5 mil. €, 5–10 mil. €, 50–100 mil. €, 100 and more had a similar 12%. The smallest representation had companies with a turnover of 20–50 mil. € [17]. The survey results show that 60% of companies have a CSR strategy or program, 38% expressed negative, and 2% have not been able to comment. Nearly half of the participants (48%) claim to have a department identified as responsible for corporate responsibility. This function appears to be the most common within the Public Relations/Marketing Department

240 Entrepreneurship - Development Tendencies and Empirical Approach

or the responsibility of a dedicated CSR team established for this purpose [17].

unimportant for just 4% of businesses [17].

Participant companies feel strongly about the impact of corporate behavior on their image and brand reputation (70%). Companies state that this is not motivated by their stakeholders (18%). It is clear that stakeholders are not yet as influential as in other countries when it comes to expectations of responsible behavior. The drivers for action on corporate responsibility are mostly internal forces arising from the company's corporate values (58%) and the belief that they should do their part for the environment and the community (68%) [17] (**Figure 8**).

At present, for 58% of companies the implementation of the CSR concept in their company is very important and 2% is even extremely important. In the next 5 years, this state of affairs will change and for 56% will be very important and for even 20% of companies will be extremely important. By contrast, 34% of companies said that CSR for their company is neither important nor unimportant and for 6% is very unimportant. In the next 5 years, this situation should change, as for 20% of companies CSR will be neither important nor unimportant and very

In 2015, Deloitte company [18] conducted a survey called "CSR managers in Central Europe" to find out how the CSR concept has an impact on the economy and society in the Central European countries. This is the first survey to uncover CSR practices in 10 Central European countries, namely Bulgaria, the Czech Republic, Kosovo, Lithuania, Latvia, Romania, Serbia, Slovakia, Slovenia and Hungary. The survey was conducted from July to September 2015 and 179 company representatives from 10 Central European countries expressed views on it. In terms of size, most enterprises with a total of 250 or more employees (63.1%) were involved in the survey. The majority of companies surveyed have a CSR concept implemented within 5 years (60.9%), almost a third (27.9%) from 5 to 10 years and 10.6% of companies over 10 years. According to this survey, 84% of respondents think that their business has contributed to addressing the country's social problems in recent years. Thirty-six percent of respondents definitely agree with this argument and 48% rather agree. On the other hand, 13% of the respondents did not agree and 2% did not comment on this issue. The results of the survey showed how the position of the CSR will develop from the point of view of the representatives of the addressed companies. The possibility that the concept will become more ripe, as the business model will include social and environmental problems, was highlighted by company representatives from Romania (50%), Serbia (41%) and Lithuania (41%). The possibility that the concept will go ahead and more and more companies will implement it, officials from Bulgaria (60%), Lithuania (59%) and Slovakia (58%) said. The possibility that the concept of CSR will have the same position was highlighted by representatives from Czech (42%), Hungarian (35%) and Slovak (32%) companies. The question was not answered in particular by Hungarians (10%), Romanians (8%) and Slovenia (8%). As the main problem that will hinder the implementation of CSR in individual countries over the next 15 years, corporate representatives have identified "perceptions of CSR as sponsorship", which has been identified by 59% of representatives. Other problems include "lack of government incentives" (52%), "company reluctance to invest" (46%), "lack of communication with the public" (35%) or "insufficient consumer pressure" (24%). In the opinion of the CSR managers polled, the most useful in CSR implementation are tools and methods enabling employee involvement such as corporate volunteering (36%), ethical programmes for employees (29%) or dialog with stakeholders (35%). Respondents also named social campaigns (29%) and pro-ecological programmes (29%) as useful initiatives. Managers pointed to socially responsible investing (40%) and inter-sectorial cooperation (32%) as tools that are underused and worth popularizing. Sustainability and CSR activities bring internal and external benefits to companies. According to the respondents, internally they ensure a stronger employee involvement (65%) and a better ethical awareness (46%). Externally, they improve the companies' reputation (65%) and recognition of the brand as socially responsible (51%) [18] (**Figure 9**).

company do not influence whether the company is socially responsible. This is confirmed by the fact that the main reason for the implementation of CSR by companies is the internal conviction of management. On the other hand, however, companies do not develop further activities aimed at improving this concept, because a large part of companies do not have a CSR strategy, cannot determine the impact of CSR implementation on customer relationships and also do not know the CSR phase of an company. Despite the fact that companies carry out social, economic and environmental social responsibility activities, a small part of the company inform their external environment about these activities and projects. A recommendation for companies in Slovakia, based on this information, is to develop a CSR strategy that analyzes company stakeholders, identifies key CSR areas, and defines main objectives for these areas. Another recommendation is to measure the success of CSR activities, to which companies can use the SROI approach that measures change in relation to social, environmental and economic results. The last recommendation is to implement CSR communication. The companies should focus on means of communication such as websites, social networks or the product and its packaging. Unlike the Slovak companies, most companies in Malta have a developed CSR strategy and a department dedicated to activities and projects within this area. The concept of CSR is important for companies in Malta and will be of even greater importance in the future. Central European companies have said the CSR concept has helped solve social problems and, in their view, the concept will become more mature in the future and more and more companies will implement it. The biggest benefit of the CSR concept is improving the company's reputation for the companies in Slovakia, Malta and Central Europe. Based on the above, it can be said that companies perceive the CSR concept positively, its implementation is important to them as well

Entrepreneurship with Social Responsibility http://dx.doi.org/10.5772/intechopen.70609 243

as to society, and in the future its importance will grow and become more developed.

Research Perception of Corporate Social Responsibility as a Value for Customer.

Department of Economics, Faculty of Operation and Economics of Transport and

Anna Križanová\*, Katarína Moravčíková and Jana Klieštiková \*Address all correspondence to<EMAIL_ADDRESS>
Communications, University of Zilina, Zilina, Slovak Republic

This contribution is a partial output of scientific grant VEGA no. 1/0024/15 The Fundamental

[1] Bussard A, Marcek E, Mikus M, Buncak, M. Spolocensky zodpovedne podnikanie [Internet]. 2005. Available from: https://www.employment.gov.sk/files/slovensky/ministerstvo/spo-

locenska-zodpovednost/csr-nahlad-vseobec.-dobry.pdf [Accessed: June 28, 2017]

**Acknowledgements**

**Author details**

**References**

**Figure 9.** CSR implementation benefits by companies in Central European countries. Source: Deloitte company [18].

Based on the information from these surveys, it can be said that the concept of CSR is perceived positively by companies in Malta, as evidenced by the fact that a large part of companies have a CSR strategy and almost half of them have a CSR department. For almost a third of companies, the implementation of the CSR concept is very important, and considers the improvement in brand reputation as the most important asset. For most companies in Central Europe, the CSR concept is important, because according to them, have contributed to solving social problems. According to the respondents, the concept will become more mature in the future and more and more companies will implement it. As well as companies in Malta, Central European companies have also identified as the most important external benefit of the concept the improving reputation of companies. A significant internal benefit is to increase employee involvement.

### **5. Conclusion**

The issue of corporate social responsibility is becoming an increasingly important element of strategic business management under the conditions of today's globalized market. Society expectations of business performance are constantly rising. One of the twenty-first century trends in company competitiveness is the management style that is associated with the so called the fight for a good thing. Currently the companies have the competitive advantage that are capable of actively responding to the ever-changing customer expectations and involving socially responsible aspects in their business.

A relatively large number of companies in Slovakia know the concept of CSR and most companies in Slovakia are socially responsible. Factors such as size, existence and legal form of company do not influence whether the company is socially responsible. This is confirmed by the fact that the main reason for the implementation of CSR by companies is the internal conviction of management. On the other hand, however, companies do not develop further activities aimed at improving this concept, because a large part of companies do not have a CSR strategy, cannot determine the impact of CSR implementation on customer relationships and also do not know the CSR phase of an company. Despite the fact that companies carry out social, economic and environmental social responsibility activities, a small part of the company inform their external environment about these activities and projects. A recommendation for companies in Slovakia, based on this information, is to develop a CSR strategy that analyzes company stakeholders, identifies key CSR areas, and defines main objectives for these areas. Another recommendation is to measure the success of CSR activities, to which companies can use the SROI approach that measures change in relation to social, environmental and economic results. The last recommendation is to implement CSR communication. The companies should focus on means of communication such as websites, social networks or the product and its packaging. Unlike the Slovak companies, most companies in Malta have a developed CSR strategy and a department dedicated to activities and projects within this area. The concept of CSR is important for companies in Malta and will be of even greater importance in the future. Central European companies have said the CSR concept has helped solve social problems and, in their view, the concept will become more mature in the future and more and more companies will implement it. The biggest benefit of the CSR concept is improving the company's reputation for the companies in Slovakia, Malta and Central Europe. Based on the above, it can be said that companies perceive the CSR concept positively, its implementation is important to them as well as to society, and in the future its importance will grow and become more developed.

### **Acknowledgements**

Based on the information from these surveys, it can be said that the concept of CSR is perceived positively by companies in Malta, as evidenced by the fact that a large part of companies have a CSR strategy and almost half of them have a CSR department. For almost a third of companies, the implementation of the CSR concept is very important, and considers the improvement in brand reputation as the most important asset. For most companies in Central Europe, the CSR concept is important, because according to them, have contributed to solving social problems. According to the respondents, the concept will become more mature in the future and more and more companies will implement it. As well as companies in Malta, Central European companies have also identified as the most important external benefit of the concept the improving reputation of companies. A significant internal benefit is to increase employee involvement.

**Figure 9.** CSR implementation benefits by companies in Central European countries. Source: Deloitte company [18].

The issue of corporate social responsibility is becoming an increasingly important element of strategic business management under the conditions of today's globalized market. Society expectations of business performance are constantly rising. One of the twenty-first century trends in company competitiveness is the management style that is associated with the so called the fight for a good thing. Currently the companies have the competitive advantage that are capable of actively responding to the ever-changing customer expectations and involving

A relatively large number of companies in Slovakia know the concept of CSR and most companies in Slovakia are socially responsible. Factors such as size, existence and legal form of

**5. Conclusion**

socially responsible aspects in their business.

242 Entrepreneurship - Development Tendencies and Empirical Approach

This contribution is a partial output of scientific grant VEGA no. 1/0024/15 The Fundamental Research Perception of Corporate Social Responsibility as a Value for Customer.

### **Author details**

Anna Križanová\*, Katarína Moravčíková and Jana Klieštiková

\*Address all correspondence to<EMAIL_ADDRESS>
Department of Economics, Faculty of Operation and Economics of Transport and Communications, University of Zilina, Zilina, Slovak Republic

### **References**

[1] Bussard A, Marcek E, Mikus M, Buncak, M. Spolocensky zodpovedne podnikanie [Internet]. 2005. Available from: https://www.employment.gov.sk/files/slovensky/ministerstvo/spolocenska-zodpovednost/csr-nahlad-vseobec.-dobry.pdf [Accessed: June 28, 2017]

[2] Caroll AB. Corporate social responsibility evolution of definitional construct. Business and Society. 1999;**38**(3):268-295. DOI: 10.1177/000765039903800303

[16] Tehemar SAZ. Communication in CSR. 1st ed. The eBook Company; 2014. 61 p. ISBN:

Entrepreneurship with Social Responsibility http://dx.doi.org/10.5772/intechopen.70609 245

[17] PWC. Corporate Social Responsibility Practices Survey [Internet]. 2013. Available from: https://www.pwc.com/mt/en/publications/assets/csr\_survey\_2013.pdf [Accessed: June

[18] Deloitte. How CSR Has Influenced Central European Societies and Economies [Internet]. 2015. Available from: https://www2.deloitte.com/content/dam/Deloitte/lt/Documents/

strategy/LT\_CSR\_Managers\_Report.pdf [Accessed: June 25, 2017]

978-87-403-0640-8

28, 2017]

[16] Tehemar SAZ. Communication in CSR. 1st ed. The eBook Company; 2014. 61 p. ISBN: 978-87-403-0640-8

[2] Caroll AB. Corporate social responsibility evolution of definitional construct. Business

[3] Kuldova L. Novy pohled na spolecenskou odpovednost firem. Plzeň: NAVA; 2012. 176

[4] Bowen HR. Social Responsibilities of the Businessman; Iowa city: University of Iowa press.

[5] European Commision. Green Paper – Promotion a European Framework for Corporate Social Responsibility [Internet]. 2001. Available from: europa.eu/rapid/press-release\_

[6] Kotler P, Lee N. Corporate Social Responsibility. USA: John Wiley & Sons; 2005. 307 p.

[7] Trnkova J. Spolecenska odpovednost firem – kompletni pruvodce tematem a zavery z pruzkumu v CR [Internet]. 2008. Available from: www.csr-online.cz [Accessed: June 28,

[8] Prskavcova M. Spolecenska odpovednost firem, lidsky kapital, rovne prilezitosti a environmentalni management s vyuzitim zahranicnich zkusenosti. 1st ed. Liberec: Technicka

[9] Kucharcikova A, Tokarcikova E, Durisova M. Human capital efficiency in trading company. In: Loster T, Pavelka T, editors. 9th International Days of Statistics and Economics; September 10-12, 2015; Prague, Czech Republic. Melandrium Company; 2015. pp. 892-

[10] Corejova T, Weick L. B2B market research in the context of regional disparities. In: Bucek M, Capello R, Hude R, et al., editors. 3rd Central European Conference in Regional

[11] Svec M, Olsovska A, Mura L. Protection of an "average consumer" in the digital society – European context. In: Matus J, Petranova D, editors. International Scientific Conference on Marketing Identity; November 10-11, 2015; Smolenice, Slovakia. Trnava; 2015. pp.

[12] Du S, Bhattacharya CB, Sen S. Maximizing business returns to corporate social responsibility (CSR): The role of CSR communication. International Journal of Management

[13] Kunz V. Spolecenska odpovednost firem. 1st ed. Praha: Grada Publishing; 2012. 201 p.

[14] Pavlik M, Belcik M. Spolecnska odpovednost organizace. 2nd ed. Praha: Grada Publishing;

[15] Industry Canada. An Implementation Guide for Canadian Business [Internet]. 2014.

Available from: https://www.ic.gc.ca/eic/site/csr- [Accessed: June 24, 2017]

and Society. 1999;**38**(3):268-295. DOI: 10.1177/000765039903800303

p. ISBN: 978-80-7211-408-5

ISBN: 978-0-471-47611-5

901. ISBN: 978-80-87990-06-3

273-282. ISSN: 1339-5726

ISBN: 978-80-247-3983-0

2010. 208 p. ISBN: 978-80-247-3157.

2017]

2013. 248 p. ISBN: 978-1-60938-196-7

244 Entrepreneurship - Development Tendencies and Empirical Approach

DOC-01-9\_en.pdf [Accessed: June 28, 2017]

univerzita v Liberci; 2008. 161 p. ISBN: 978-80-7372-436-8

Science; October 07-09, 2009; Kosice, Slovakia; 2009. pp. 160-167

Reviews. 2010;**12**(1):8-19. DOI: 10.1111/j.1468-2370.2009.00276.x

**Chapter 13**

Provisional chapter

**Importance of Corporate Governance in Socially**

DOI: 10.5772/intechopen.70536

Importance of Corporate Governance in Socially

Many organisations have already realised that if they want to be successful, they must have a sense of responsibility not only for their business activities, but also for the whole society. That approach is entirely consistent with the basic idea of the concept of corporate social responsibility (CSR). In the economic area of the CSR concept, corporate governance plays an important role. Based on the OECD definition, corporate governance (CG) is a system by which business corporations are directed and controlled. The chapter provides the first comprehensive survey of corporate governance, the way to estimate the level of CG to individual companies on the Slovak capital market through our own corporate governance index. In analytical part of this chapter, we investigate disclosure of corporate governance in selected enterprises in Slovakia for the period 2011–2015 and on the basis of this information we prepare a corporate governance index. The corporate governance index helps assess the level of compliance with CG principles in companies whose securities are listed on the Bratislava Stock Exchange. The chapter fulfils a need for advancing knowledge on corporate governance and provides a practical framework for responsible behaviour of shareholders and managers in

Keywords: corporate social responsibility, corporate governance, corporate governance

Responsibility in business again come to the fore and the current period is one of the factors that can significantly contribute to achieving stability and sustainable growth in the global economic environment. Enterprises should build their position on the principles of transparency and

> © The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and eproduction in any medium, provided the original work is properly cited.

© 2018 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

**Responsible Behaviour of Enterprises**

Responsible Behaviour of Enterprises

Hussam Musa, Zdenka Musová and

Hussam Musa, Zdenka Musová and

http://dx.doi.org/10.5772/intechopen.70536

socially responsible enterprises.

1. Theoretical background

index, Bratislava Stock Exchange, Slovakia, survey

Additional information is available at the end of the chapter

Additional information is available at the end of the chapter

Lenka Debnárová

Lenka Debnárová

Abstract

Provisional chapter

### **Importance of Corporate Governance in Socially Responsible Behaviour of Enterprises** Importance of Corporate Governance in Socially

DOI: 10.5772/intechopen.70536

Hussam Musa, Zdenka Musová and Lenka Debnárová Hussam Musa, Zdenka Musová and

Additional information is available at the end of the chapter Lenka Debnárová

Responsible Behaviour of Enterprises

http://dx.doi.org/10.5772/intechopen.70536 Additional information is available at the end of the chapter

#### Abstract

Many organisations have already realised that if they want to be successful, they must have a sense of responsibility not only for their business activities, but also for the whole society. That approach is entirely consistent with the basic idea of the concept of corporate social responsibility (CSR). In the economic area of the CSR concept, corporate governance plays an important role. Based on the OECD definition, corporate governance (CG) is a system by which business corporations are directed and controlled. The chapter provides the first comprehensive survey of corporate governance, the way to estimate the level of CG to individual companies on the Slovak capital market through our own corporate governance index. In analytical part of this chapter, we investigate disclosure of corporate governance in selected enterprises in Slovakia for the period 2011–2015 and on the basis of this information we prepare a corporate governance index. The corporate governance index helps assess the level of compliance with CG principles in companies whose securities are listed on the Bratislava Stock Exchange. The chapter fulfils a need for advancing knowledge on corporate governance and provides a practical framework for responsible behaviour of shareholders and managers in socially responsible enterprises.

Keywords: corporate social responsibility, corporate governance, corporate governance index, Bratislava Stock Exchange, Slovakia, survey

### 1. Theoretical background

Responsibility in business again come to the fore and the current period is one of the factors that can significantly contribute to achieving stability and sustainable growth in the global economic environment. Enterprises should build their position on the principles of transparency and

© The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and eproduction in any medium, provided the original work is properly cited.

integrated approach to sustainable products and services, and the active cooperation of all stakeholders contribute to the overall well-being of society and the entire planet.

management. According to Mallin [19] optimal management of a trading company means protecting its creativity, freedom and flexibility and ensuring its continuous ability to create wealth and welfare which is essential to the civil society. Authority is the brain of the company cultivating executive to share the values with all shareholders and other parties involved. Klírová [20] considers the assessment of business performance the main function of CG from wider perspective than executive, that is, taking into consideration interests of all parties legitimately involved, and in this way influencing the creation of business strategy by its activity and its implementation with the aim of satisfying these interests. OECD's [21] definition characterises the basis of CG very well – the system by which business corporations are directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation, such as the board, managers, shareholders and other stakeholders and spells out the rules and procedures for making decisions in corporate affairs. Monks and Minow [22] also support this idea and define corporate governance as relations between different parties during influencing the governance and performance of companies, while shareholders and management are the primary parties and employees, customers, suppliers, creditors and other interest groups are the secondary. According to Mallin [19], the objective of corporate governance is to ensure that the firm is managed in the best interest of shareholders and other stakeholders of the company. CG supports transparency and accountability, which are key attributes for investors for the proper

Importance of Corporate Governance in Socially Responsible Behaviour of Enterprises

http://dx.doi.org/10.5772/intechopen.70536

249

The objective of creating and improving the corporate governance of companies is the development of best practice based on the principles of good processed into a wide variety of policies and codes. The first formulation of the CG principles was in 1992, when Sir Adrian Cadbury, a member of the Institute of Directors, wrote the Cadbury Code of Best Practice of Great Britain, in which he emphasises the principles of information openness, fairness and responsibility in the terms of CG [23]. Later, in 1999 OECD composed basic principles of management and governance. As a result of various accounting scandals at the end of the millennium, European Commission issued Action Plan: European company law and corporate governance – a modern legal framework for more engaged shareholders and sustainable companies in 2003. At the same time The US Government accepted Sarbanes-Oxley Act with the aim to increase investors' protection by enhancing demands on the accuracy and correctness of published financial documents. OECD has updated the original principles in 2004 and added a separated principle laid down by the national regulator, which should promote transparent and efficient market, comply with the laws and clearly define the division of responsibilities among different supervisory, regulatory and law enforcement institutions. OECD principles became the basis for the creation of national codes of corporate governance in the most developed countries of the world. OECD updated and composed new G20/OECD principles of corporate governance with the aim to increase the confidence of companies and

In Slovakia, Central European Corporate Governance Association (CECGA) has yet again initiated and achieved the revision of the National Code of Corporate Governance in cooperation with the representatives of Public Administration (the respective ministries) and the Bratislava Stock Exchange in 2016 [25]. The foundation for this revision was, besides the new

investors in the capital market in September 2015 in Ankara [24].

management of the company.

Responsible behaviour is not a one-off or short-term matter; it has to be a long-term consistent business philosophy. It often involves radical changes in the thinking of owners, managers and employees of companies, who apart from their own corporate interests and needs and wishes of customers also factor in long-term interests of the society.

Modern history of corporate social responsibility (CSR) began in the 1950s with the first definition by CSR theorists Bowen [1] who perceived it as obligations of businessmen to pursue those policies, to make those decisions or to follow those lines of action which are desirable in terms of the objectives and values of our society. Other authors supported this idea, elaborated it and supplemented it with additional dimensions [2–6]. In the 1980s, various alternative conceptions of social responsibility developed and commitments of companies widened in relation to all stakeholders [7–9].

Social responsibility is based on the triple-bottom-line which comprises '3P': profit–people– planet. It is a philosophy in business which says that overall performance of a company should be measured by its combined contribution (1) to the economic prosperity, (2) to the quality of the environment and (3) to the social capital [10–13]. Based on the triple-bottom-line, there are three basic areas of the responsible behaviour of companies – economic, social and environmental. Each of them includes various activities from which company can choose based on its specialisation and stakeholders' requirements. In the economic field, CSR emphasis on transparency in the business and building good relations with stakeholders who can influence economic activity of the company, especially with the customers, suppliers, shareholders, investors and business partners [14].

Corporate governance (CG) also plays an important role in the economic area of the CSR concept, particularly in relation to shareholders and employees. Corporate governance has become a significant factor in managing organisations in the current global and complex environment. In order to understand CG, it is important to highlight its definition. There is no single accepted definition for corporate governance but it can be defined as a set of processes and structures for controlling and directing an organisation. It constitutes a set of rules, which governs the relationships between management, shareholders and stakeholders [15]. The term "corporate governance" has a clear origin from a Greek word "kyberman" meaning to steer, guide or govern. From a Greek word, it moved to Latin, where it was known as "gubernare" and the French version of "governor". It could also mean the process of decision-making and the process by which decisions may be implemented [16].

Corporate governance includes all types of firms and its definitions could extend to cover all of the economic and non-economic activities. Literatures in CG provide some form of meaning on governance, but fall short in its precise meaning of governance. Corporate governance deals with the ways in which suppliers of finance to corporations assure themselves of getting a return to their investment [17]. Roubíček [18] states that the term corporate governance can also be understood as an inner organisation of a company, that is, the structure of competency of the advisory board and the board of directors and relations between shareholders and the management. According to Mallin [19] optimal management of a trading company means protecting its creativity, freedom and flexibility and ensuring its continuous ability to create wealth and welfare which is essential to the civil society. Authority is the brain of the company cultivating executive to share the values with all shareholders and other parties involved. Klírová [20] considers the assessment of business performance the main function of CG from wider perspective than executive, that is, taking into consideration interests of all parties legitimately involved, and in this way influencing the creation of business strategy by its activity and its implementation with the aim of satisfying these interests. OECD's [21] definition characterises the basis of CG very well – the system by which business corporations are directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation, such as the board, managers, shareholders and other stakeholders and spells out the rules and procedures for making decisions in corporate affairs. Monks and Minow [22] also support this idea and define corporate governance as relations between different parties during influencing the governance and performance of companies, while shareholders and management are the primary parties and employees, customers, suppliers, creditors and other interest groups are the secondary. According to Mallin [19], the objective of corporate governance is to ensure that the firm is managed in the best interest of shareholders and other stakeholders of the company. CG supports transparency and accountability, which are key attributes for investors for the proper management of the company.

integrated approach to sustainable products and services, and the active cooperation of all

Responsible behaviour is not a one-off or short-term matter; it has to be a long-term consistent business philosophy. It often involves radical changes in the thinking of owners, managers and employees of companies, who apart from their own corporate interests and needs and wishes

Modern history of corporate social responsibility (CSR) began in the 1950s with the first definition by CSR theorists Bowen [1] who perceived it as obligations of businessmen to pursue those policies, to make those decisions or to follow those lines of action which are desirable in terms of the objectives and values of our society. Other authors supported this idea, elaborated it and supplemented it with additional dimensions [2–6]. In the 1980s, various alternative conceptions of social responsibility developed and commitments of companies

Social responsibility is based on the triple-bottom-line which comprises '3P': profit–people– planet. It is a philosophy in business which says that overall performance of a company should be measured by its combined contribution (1) to the economic prosperity, (2) to the quality of the environment and (3) to the social capital [10–13]. Based on the triple-bottom-line, there are three basic areas of the responsible behaviour of companies – economic, social and environmental. Each of them includes various activities from which company can choose based on its specialisation and stakeholders' requirements. In the economic field, CSR emphasis on transparency in the business and building good relations with stakeholders who can influence economic activity of the company, especially with the customers, suppliers, shareholders,

Corporate governance (CG) also plays an important role in the economic area of the CSR concept, particularly in relation to shareholders and employees. Corporate governance has become a significant factor in managing organisations in the current global and complex environment. In order to understand CG, it is important to highlight its definition. There is no single accepted definition for corporate governance but it can be defined as a set of processes and structures for controlling and directing an organisation. It constitutes a set of rules, which governs the relationships between management, shareholders and stakeholders [15]. The term "corporate governance" has a clear origin from a Greek word "kyberman" meaning to steer, guide or govern. From a Greek word, it moved to Latin, where it was known as "gubernare" and the French version of "governor". It could also mean the process of decision-making and

Corporate governance includes all types of firms and its definitions could extend to cover all of the economic and non-economic activities. Literatures in CG provide some form of meaning on governance, but fall short in its precise meaning of governance. Corporate governance deals with the ways in which suppliers of finance to corporations assure themselves of getting a return to their investment [17]. Roubíček [18] states that the term corporate governance can also be understood as an inner organisation of a company, that is, the structure of competency of the advisory board and the board of directors and relations between shareholders and the

stakeholders contribute to the overall well-being of society and the entire planet.

of customers also factor in long-term interests of the society.

248 Entrepreneurship - Development Tendencies and Empirical Approach

widened in relation to all stakeholders [7–9].

investors and business partners [14].

the process by which decisions may be implemented [16].

The objective of creating and improving the corporate governance of companies is the development of best practice based on the principles of good processed into a wide variety of policies and codes. The first formulation of the CG principles was in 1992, when Sir Adrian Cadbury, a member of the Institute of Directors, wrote the Cadbury Code of Best Practice of Great Britain, in which he emphasises the principles of information openness, fairness and responsibility in the terms of CG [23]. Later, in 1999 OECD composed basic principles of management and governance. As a result of various accounting scandals at the end of the millennium, European Commission issued Action Plan: European company law and corporate governance – a modern legal framework for more engaged shareholders and sustainable companies in 2003. At the same time The US Government accepted Sarbanes-Oxley Act with the aim to increase investors' protection by enhancing demands on the accuracy and correctness of published financial documents. OECD has updated the original principles in 2004 and added a separated principle laid down by the national regulator, which should promote transparent and efficient market, comply with the laws and clearly define the division of responsibilities among different supervisory, regulatory and law enforcement institutions. OECD principles became the basis for the creation of national codes of corporate governance in the most developed countries of the world. OECD updated and composed new G20/OECD principles of corporate governance with the aim to increase the confidence of companies and investors in the capital market in September 2015 in Ankara [24].

In Slovakia, Central European Corporate Governance Association (CECGA) has yet again initiated and achieved the revision of the National Code of Corporate Governance in cooperation with the representatives of Public Administration (the respective ministries) and the Bratislava Stock Exchange in 2016 [25]. The foundation for this revision was, besides the new G20/OECD principles, the recommendations of the European Commission for the area of corporate governance (CG) related to independent members of the organisations' bodies, remuneration and reporting (recommendations No. 2004/913/ES, 2005/162/ES, 2009/385/ES and 2014/208/ EU). The Guidelines of the UNO on human rights of 2011 were also taken into consideration.

Corporate governance is becoming more difficult with the growing globalisation. Results of inappropriate governance in (not only multinational) companies came out mainly during the crisis and fully influenced not only companies themselves, but also the global economy. The failure of using CG principles, insufficient transparency and information asymmetry were also the reasons for the negative development. Information asymmetry or the imperfection of information is considered as one of the reasons for the failure of the market mechanism and the price system in allocating production sources. Stiglitz [26] defines it as a situation in which various information are available for different people (or market entities). In this context the information asymmetry emerges not only between managers and shareholders, but also between investors and all stakeholders of the company. Each group follows its own interests with the aim to maximise its own benefit which is the main motive for the information asymmetry formation. One of the ways to eliminate information asymmetry is responsible implementation of corporate governance principles, which many authors of foreign studies confirm [27–29].

The subject of our research was companies whose securities are listed on the Bratislava Stock Exchange over the period 2011–2015. There were registered 87 share issuers and 11 issuers of bonds in 2011, according to data from the National Bank of Slovakia. The total number of companies in 2011 was 104 due to the fact that some companies issue shares and also bonds. The total number of issuers in 2012 was 109 companies and in 2013 was 102 companies. The issuer on the Bratislava Stock Exchange does not have information disclosure obligations to receive a security for trading on a multilateral trading system. For this reason, we have excluded companies on the Multilateral Trading Facility. There were 66 companies in 2014 and 65 companies in 2015. The number of companies which quote their shares and bonds is

The issuer does not have information disclosure obligations to receive a security for trading on a multilateral trading

system. For this reason, we have excluded companies in the multilateral trading system.

Table 1. The number of shares issuers and bonds issuers.

The number of shares issuers 87 92 84 47 48 The number of bonds issuers 11 11 11 13 11 The number of issuers of shares and also bonds 6 6 7 6 6 Total number of issuers 104 109 102 66\* 65\*

2011 2012 2013 2014 2015

http://dx.doi.org/10.5772/intechopen.70536

251

Importance of Corporate Governance in Socially Responsible Behaviour of Enterprises

We obtained the information from the companies´ annual financial reports which are available in the Central Register of Regulated Information (hereinafter "CERI"), the Register of Financial Statements (hereinafter "RUZ") and on the companies' websites. We researched the disclosure in the Register of Financial Statements for 2013. The amendment to the Accounting Act No. 431/2002, as subsequently amended (hereinafter "Accounting Act"), which entered into force on 1 January 2014, introduces a new obligation for issuers to publish the annual financial report in RUZ pursuant to § 23, paragraph 2 of this Act. The Act on Stock Exchange No. 429/2002, as subsequently amended (hereinafter "the Act on Stock Exchange"), has been amended as well. According to § 45, paragraph 1 of this Act, the issuer is required to provide regulated information in CERI of the National Bank of Slovakia. This legal obligation is fulfilled when the issuer has entered regulated information in RUZ. For this reason, we have extended our evaluation to include information

We have compiled our own corporate governance index in order to complete for an overall assessment of the level of corporate governance in individual companies. Authors of foreign studies [27–30] also used a corporate governance index in determining the level of corporate governance, but often without specifically indicating its method. In our case, we could not take over one of the models, but we have compiled own index suited to the Slovak capital market standards and disclosure by companies. This index uses ordinal measures of various evalua-

in Table 1.

\*

disclosure in RUZ.

tive criteria. The criteria were as follows:

Level of adherence to corporate governance principles can also indicate the development of capital market and business environment of a country. Implementation of CG principles has probably positive impact on a variety of corporate management's areas [9, 16–17, 31]. Mallin [19] and Claessens and Yurtoglu [32] summarise these positive impacts as follows:

### 2. Data and methods

The chapter aims to investigate disclosure of information on corporate governance in companies whose securities are listed on the Bratislava Stock Exchange and on the basis on this information to compile own corporate governance index, through which it is possible to assess the level of compliance with corporate governance principles in these companies in Slovakia for the period 2011–2015.

\* The issuer does not have information disclosure obligations to receive a security for trading on a multilateral trading system. For this reason, we have excluded companies in the multilateral trading system.

Table 1. The number of shares issuers and bonds issuers.

G20/OECD principles, the recommendations of the European Commission for the area of corporate governance (CG) related to independent members of the organisations' bodies, remuneration and reporting (recommendations No. 2004/913/ES, 2005/162/ES, 2009/385/ES and 2014/208/ EU). The Guidelines of the UNO on human rights of 2011 were also taken into consideration.

250 Entrepreneurship - Development Tendencies and Empirical Approach

Corporate governance is becoming more difficult with the growing globalisation. Results of inappropriate governance in (not only multinational) companies came out mainly during the crisis and fully influenced not only companies themselves, but also the global economy. The failure of using CG principles, insufficient transparency and information asymmetry were also the reasons for the negative development. Information asymmetry or the imperfection of information is considered as one of the reasons for the failure of the market mechanism and the price system in allocating production sources. Stiglitz [26] defines it as a situation in which various information are available for different people (or market entities). In this context the information asymmetry emerges not only between managers and shareholders, but also between investors and all stakeholders of the company. Each group follows its own interests with the aim to maximise its own benefit which is the main motive for the information asymmetry formation. One of the ways to eliminate information asymmetry is responsible implementation of corporate

Level of adherence to corporate governance principles can also indicate the development of capital market and business environment of a country. Implementation of CG principles has probably positive impact on a variety of corporate management's areas [9, 16–17, 31]. Mallin

• better access of the company to the external funding sources. Access to the funding sources stimulates higher investments, higher growth and the creation of new jobs; • lowering the costs of capital and related higher company valuation; company's attractiveness for investors will increase which leads to growth and higher employment;

• improvement of operational performance thanks to better source allocation and more

• better relations with all company's stakeholders – responsible implementation of CG principles can generally minimise the occurrence of financial crises which imply economic

The chapter aims to investigate disclosure of information on corporate governance in companies whose securities are listed on the Bratislava Stock Exchange and on the basis on this information to compile own corporate governance index, through which it is possible to assess the level of compliance with corporate governance principles in these companies in Slovakia

governance principles, which many authors of foreign studies confirm [27–29].

[19] and Claessens and Yurtoglu [32] summarise these positive impacts as follows:

effective governance which creates wealth in general;

and social costs.

2. Data and methods

for the period 2011–2015.

The subject of our research was companies whose securities are listed on the Bratislava Stock Exchange over the period 2011–2015. There were registered 87 share issuers and 11 issuers of bonds in 2011, according to data from the National Bank of Slovakia. The total number of companies in 2011 was 104 due to the fact that some companies issue shares and also bonds. The total number of issuers in 2012 was 109 companies and in 2013 was 102 companies. The issuer on the Bratislava Stock Exchange does not have information disclosure obligations to receive a security for trading on a multilateral trading system. For this reason, we have excluded companies on the Multilateral Trading Facility. There were 66 companies in 2014 and 65 companies in 2015. The number of companies which quote their shares and bonds is in Table 1.

We obtained the information from the companies´ annual financial reports which are available in the Central Register of Regulated Information (hereinafter "CERI"), the Register of Financial Statements (hereinafter "RUZ") and on the companies' websites. We researched the disclosure in the Register of Financial Statements for 2013. The amendment to the Accounting Act No. 431/2002, as subsequently amended (hereinafter "Accounting Act"), which entered into force on 1 January 2014, introduces a new obligation for issuers to publish the annual financial report in RUZ pursuant to § 23, paragraph 2 of this Act. The Act on Stock Exchange No. 429/2002, as subsequently amended (hereinafter "the Act on Stock Exchange"), has been amended as well. According to § 45, paragraph 1 of this Act, the issuer is required to provide regulated information in CERI of the National Bank of Slovakia. This legal obligation is fulfilled when the issuer has entered regulated information in RUZ. For this reason, we have extended our evaluation to include information disclosure in RUZ.

We have compiled our own corporate governance index in order to complete for an overall assessment of the level of corporate governance in individual companies. Authors of foreign studies [27–30] also used a corporate governance index in determining the level of corporate governance, but often without specifically indicating its method. In our case, we could not take over one of the models, but we have compiled own index suited to the Slovak capital market standards and disclosure by companies. This index uses ordinal measures of various evaluative criteria. The criteria were as follows:

a. disclosure of the current annual report in Central Register of Regulated Information,

disclosure of the audit committee – information on the establishment of the Committee, the explanation if the committee is not established, description of activities and results of the work of the committee during the reporting period. We did the same with the other two committees. We have compiled corporate governance index for each reporting company with aim to estimate levels of corporate governance. The corporate governance index consists of the criteria, which are to be assessed by ordinal character based on their importance. Weightings are assigned to each criterion and are determined on the basis the expert estimation and theoretically supported by Saaty´s method of determining the weights. The Saaty´s method

Importance of Corporate Governance in Socially Responsible Behaviour of Enterprises

http://dx.doi.org/10.5772/intechopen.70536

compares pairs and evaluation is entered into a matrix S = (sij) in the following way:

1 – i and j are equivalent

 – i is slightly preferred over j – i is strongly preferred over j – i is very strongly preferred over j – i is absolutely preferred over j

The values 2, 4, 6 and 8 are the intermediate stage evaluation. For ease of calculation used

ln sij � ln vi � ln vj

Q k j¼1 sij " #<sup>1</sup>=<sup>k</sup>

> Q k j¼1

To an objective assessment of the importance of each criterion in corporate governance index

CG index <sup>¼</sup> <sup>0</sup>:095<sup>∗</sup>ð Þþ <sup>a</sup> <sup>þ</sup> <sup>b</sup> <sup>þ</sup> <sup>c</sup> <sup>0</sup>:079<sup>∗</sup><sup>d</sup> <sup>þ</sup> <sup>0</sup>:159<sup>∗</sup><sup>e</sup> <sup>þ</sup> <sup>0</sup>:079<sup>∗</sup><sup>f</sup> <sup>þ</sup> <sup>0</sup>:079<sup>∗</sup><sup>g</sup> <sup>þ</sup> <sup>0</sup>:079<sup>∗</sup><sup>h</sup>

Individual assessment criteria were given a score and assigned a weight according to their degree of importance. We set the value of coefficients based on expert estimation and supported by Saaty´s method of determining the weights. We identified through expert estimation that

P k i¼1

� � � � <sup>2</sup> ! min (2)

sij " #<sup>1</sup>=<sup>k</sup> (3)

<sup>j</sup> <sup>þ</sup> <sup>0</sup>:079<sup>∗</sup><sup>k</sup> (4)

(1)

253

ðsijÞ ¼

method of least squares logarithmic:

Conditions for validity: P

where i = 1, …, k.

8 >>>>>><

>>>>>>:

<sup>F</sup> <sup>¼</sup> <sup>X</sup> k

vi ¼ 1.

The solution is the geometric mean of the row of the matrix S:

criteria, we assigned weights by expert estimate that are as follows:

<sup>i</sup> <sup>þ</sup> <sup>0</sup>:079<sup>∗</sup>

k i¼1

<sup>þ</sup> <sup>0</sup>:079<sup>∗</sup>

i¼1

X j>i

vi ¼

During the evaluation of corporate governance criteria there were several problems and limitations. Legislation in force does not require the company to disclose information on the website of the company. Obligations for companies that were the subject of the survey are to disclose information for the current accounting period in CERI or RUZ. In order to appreciate the efforts of the company to inform stakeholders through the website, corporate governance index also took account of this fact. The company, which released information in CERI, RUZ and on its website also, reached the highest score in that category. Assessment of the level and quality of information in the Statement on Corporate Governance was another criterion. Particular of the Statement on Corporate Governance are specified in § 20 of the Accounting Act. Some companies in structuring the Statement on Corporate Governance followed the legal requirements, but the content of the information was insufficient. Other companies used the statement forms prepared by Central European Corporate Governance Association (CECGA). Due to the objective assessment of the quality of information in the statement we did not evaluate the structure of statements on corporate governance, but the quality of the information, that is, whether the company said only general information or comprehensively and concisely explain each point of statement, together with deviations from the Code. The obligation to establish an audit committee is required by § 19 of the Accounting Act. Based on this legal requirement, the entity does not have an audit committee if its supervisory board performs the activities of the audit committee or the parent company has established a committee. The assessment of whether the company has established or has not established audit committee would not provide us an objective assessment. Therefore, we evaluated a comprehensive disclosure of the audit committee – information on the establishment of the Committee, the explanation if the committee is not established, description of activities and results of the work of the committee during the reporting period. We did the same with the other two committees.

We have compiled corporate governance index for each reporting company with aim to estimate levels of corporate governance. The corporate governance index consists of the criteria, which are to be assessed by ordinal character based on their importance. Weightings are assigned to each criterion and are determined on the basis the expert estimation and theoretically supported by Saaty´s method of determining the weights. The Saaty´s method compares pairs and evaluation is entered into a matrix S = (sij) in the following way:

$$\mathbf{r}(s\_{ij}) = \begin{cases} 1 - \text{i and j are equivalent} \\ 2 - \text{i is slightly preferred over j} \\ 5 - \text{i is strongly preferred over j} \\ 7 - \text{i is very strongly preferred over j} \\ 9 - \text{i is absolutely preferred over j} \end{cases} \tag{1}$$

The values 2, 4, 6 and 8 are the intermediate stage evaluation. For ease of calculation used method of least squares logarithmic:

$$F = \sum\_{i=1}^{k} \sum\_{j>i} \left( \ln s\_{\vec{\eta}} - \left( \ln v\_i - \ln v\_j \right) \right)^2 \to \min \tag{2}$$

Conditions for validity: P k i¼1 vi ¼ 1.

The solution is the geometric mean of the row of the matrix S:

$$\upsilon\_i = \frac{\left[\prod\_{j=1}^k s\_{ij}\right]^{1/k}}{\sum\_{i=1}^k \left[\prod\_{j=1}^k s\_{ij}\right]^{1/k}} \tag{3}$$

where i = 1, …, k.

a. disclosure of the current annual report in Central Register of Regulated Information,

d. the scope and clarity of the information about corporate governance in annual report

f. information about board members, such as names, experience, responsibility and

g. information about the structure and amount of remuneration for individual members of

i. information about the establishment and activities of an Audit Committee, or the failure

j. information about the establishment and activities of a Remuneration Committee or the

k. information about the establishment and activities of a Nomination Committee or the

During the evaluation of corporate governance criteria there were several problems and limitations. Legislation in force does not require the company to disclose information on the website of the company. Obligations for companies that were the subject of the survey are to disclose information for the current accounting period in CERI or RUZ. In order to appreciate the efforts of the company to inform stakeholders through the website, corporate governance index also took account of this fact. The company, which released information in CERI, RUZ and on its website also, reached the highest score in that category. Assessment of the level and quality of information in the Statement on Corporate Governance was another criterion. Particular of the Statement on Corporate Governance are specified in § 20 of the Accounting Act. Some companies in structuring the Statement on Corporate Governance followed the legal requirements, but the content of the information was insufficient. Other companies used the statement forms prepared by Central European Corporate Governance Association (CECGA). Due to the objective assessment of the quality of information in the statement we did not evaluate the structure of statements on corporate governance, but the quality of the information, that is, whether the company said only general information or comprehensively and concisely explain each point of statement, together with deviations from the Code. The obligation to establish an audit committee is required by § 19 of the Accounting Act. Based on this legal requirement, the entity does not have an audit committee if its supervisory board performs the activities of the audit committee or the parent company has established a committee. The assessment of whether the company has established or has not established audit committee would not provide us an objective assessment. Therefore, we evaluated a comprehensive

h. information about risk management, defined predictable risks and risk quantification,

e. the scope, clarity and quality of information in the corporate governance statement,

b. disclosure of the current annual report in Register of Financial Statements,

c. disclosure of the current annual report on the companies´ websites,

according to § 20 of the Accounting Act,

252 Entrepreneurship - Development Tendencies and Empirical Approach

functions,

the board,

to establish one,

failure to establish one and

failure to establish one.

To an objective assessment of the importance of each criterion in corporate governance index criteria, we assigned weights by expert estimate that are as follows:

$$\begin{aligned} \text{CG index} &= 0.095^\*(\mathbf{a} + \mathbf{b} + \mathbf{c}) + 0.079^\*\mathbf{d} + 0.159^\*\mathbf{e} + 0.079^\*\mathbf{f} + 0.079^\*\mathbf{g} + 0.079^\*\mathbf{h} \\ &+ 0.079^\*\mathbf{i} + 0.079^\*\mathbf{j} + 0.079^\*\mathbf{k} \end{aligned} \tag{4}$$

Individual assessment criteria were given a score and assigned a weight according to their degree of importance. We set the value of coefficients based on expert estimation and supported by Saaty´s method of determining the weights. We identified through expert estimation that criterion "the scope, clarity and quality of information in corporate governance statement" as the most important criterion in the index. Other important criteria with lower value of the coefficient were: "disclosure of the current annual report in CERI", "disclosure of the current annual report in RUZ" and "disclosure of the current annual report on the companies´ websites". Other criteria were the same coefficients with respect to their significance in comparison with the mentioned higher ranked criteria in the index. Each monitored company was scored using a weighted sum of the evaluated criteria. This allowed corporate governance comparisons across companies. We have compiled Saaty´s matrix, which is shown in Tables 2 and 3, which is evaluated 11 criteria in the index and their importance in pairwise comparisons.

Corporate governance index with weights set through Saaty´s method is as follows:

CG index <sup>¼</sup> <sup>0</sup>:115<sup>∗</sup>ð Þþ <sup>a</sup> <sup>þ</sup> <sup>b</sup> <sup>þ</sup> <sup>c</sup> <sup>0</sup>:061<sup>∗</sup><sup>d</sup> <sup>þ</sup> <sup>0</sup>:229<sup>∗</sup><sup>e</sup> <sup>þ</sup> <sup>0</sup>:061<sup>∗</sup><sup>f</sup> <sup>þ</sup> <sup>0</sup>:061<sup>∗</sup>

3.1. Disclosure of information in the context of corporate governance

ment of transparency in the Slovak capital market.

Aiming to emphasise the importance of applying the principles of corporate governance also in the regulated Slovak market, we carried out a research in the period of 2011–2015 in companies, whose securities are listed on the Bratislava Stock Exchange. Outcomes of the research then became the foundation for creating corporate governance index which is the determining indicator of the level of adherence to corporate governance principles in Slovakia.

One of the basic governance framework in Slovakia is the framework on disclosure and transparency. It is in the interest of the companies eliminate information asymmetry, which

According to § 34 of the Act on Stock Exchange, as subsequently amended, the companies that issue securities are required to publish the Annual Financial Report, which shall include information on corporate governance, no later than 4 months after the end of the financial year. During the reporting period, there were companies that failed to meet this legal obligation and did not publish the information in CERI, RUZ and even on their website. In annual comparison 2011–2013, the proportion of these companies remained almost unchanged (25 companies) and in 2013 the number dropped by only one company. After the exclusion of companies without information obligations, we noticed a significant decreased in the number of companies that did not disclose information in CERI, in RUZ and on company´s website

In 2011 there were 23 companies (about 22%) that disclosed the current annual financial report in CERI or on the website. In 2011 and 2013, researched companies preferred disclosure in CERI. Inverse trend was recorded in 2012, which was dominated by disclosure of documents on the company website. We appreciate the on-year increase in the proportion of companies that published documents in CERI and on their website also. This share decreased from 53.8% in 2011 to 24.6% companies in 2015. This fact indicates the effort to inform all stakeholders on the part of most companies in Slovakia, which in the long term can contribute to the improve-

During the evaluation of the transparency in 2013 we took into account the disclosure in RUZ, for example, companies can disclose information in CERI, on their website and in RUZ. The share of companies, that disclose documents in 2 of 3 options, was at 67.6/%, that is, 69 companies. The companies preferred to publish documents in CERI before in RUZ. In the year 2013, only eight companies published annual reports in RUZ. For the mentioned period, we noticed only one company that published the documents in CERI, on the website and in RUZ.

occurs mainly between managers, shareholders, investors and other stakeholders.

3. Results

either.