Corporate Social Responsibility in Global Diamond Markets

Sustainable development, broadly explained, encompasses firms’ desire to simultaneously sustain, enhance and promote environmental, societal and economic dimensions of corporate workability. In practice, however, striving towards sustainability in all these areas may trigger conflicts, mismanagements, wrong evaluations or even bad investments, making the corporate stability shatter. Generally speaking, SD is by its very nature a ‘corporate-centric’ concept in the sense that it deals with how firms interact with stakeholders in order to secure important resources provided by them and to them. In other words, SD is seen more as a tool rather then as an end state. In fact, corporations are still being accused of perusing the issue of sustainability with unclear strategies and rather opportunistic behavior, often in concordance with political agenda. The first premise for this study is that although companies are accustomed to setting up compliance mechanisms in relation to a whole raft of regulatory requirements, there are aspects of CSR that still lack a compliance framework. This regulatory function was assumed by voluntary codes of conduct, measured by inter-corporate evaluations and reported by non-financial disclosures. According to Frankental, ‘an indicator of the real value that companies attach to CSR is where they locate this function within the organizational structure’. A second premise for this dissertation is that regulatory tools should be constantly redefined to serve changing needs of the society and the sector. In order to capture this dynamicity, some organizations started applying algorithmic principles to make constant adjustments to their business models, strategies and structures, bringing together capabilities and assets to create advantageous positions. From CSR perspective, it entails deploying a nested set of strategic processes, to which the organization gives more visibility and transparency, engaging, for example, NGO’s into social/environmental investments’ evaluation. Consequently, we postulate that building organizational capacity to invest the time and the energy to explore sustainability trends and emerging issues may anticipate future expectations and, at the business level, move CSR from reactive to a proactive dimension. A third premise for this dissertation is that defining the value proposition for stakeholders is a starting point for the organizations’ value creation architecture and the very first step in creating complex exchange relations with actors operating along the supply chain. Generally, the complexity of these relations stands in the network component, strategic alliance system, new ethical investments’ patterns as also in the product stewardship concept. On the flipside, the overly frequent use of mediated power, excessive information asymmetries and lack of transparency may damage normative commitment between the parties and cause increased channel conflict with immediate negative effects on the value creation process. The study contributes to the understanding of the Corporate Social Responsibility in the diamond mining industry in multiple ways. First, it provides an interesting insight into the industry, which till the late 60’s had been forcefully driven by one-supplier choices, de-legitimizing efforts of smaller producers. Secondly, it provides in-depth empirical evidence of the current implementation status of CSR, highlighting the problem of poor reporting practices and historically ‘defensive’ character of its communication patterns. Thirdly, with means of a new conceptual framework (Pro-Active CSR Model), calls the businesses to provide extensive commitments to CSR, recognizing its competitive dimension and its role as a differentiation factor. Finally, with means of quantitative analysis we verify if the ethical investments’ optimization policies change in hypothesis of booming earnings and substantial growth.