Stages of Corporate Citizenship

Boston College Center for Corporate Citizenship research fellow Philip Mirvis and executive director Bradley Googins define corporate citizenship as the sum total of commercial and philanthropic actions. Harvard Business School professor Michael Porter defines it in terms of "shared value" -- policies that drive profitability while simultaneously advancing socioeconomic conditions in the communities where the corporation is based.

Mirvis and Googins have identified five stages of corporate citizenship -- elementary, engaged, innovative, integrated and transforming -- representing "distinct patterns of activity at different points of development." The stages are measured along seven dimensions: definition, purpose, leadership support, structure, issues management, stakeholder relationships and transparency. Corporations evolve to higher stages based on four triggers: the credibility and capacity to support citizenship activities, the coherence of those activities, and the commitment to incorporate citizenship in the corporate culture.

Also known as the compliant stage, the citizenship activities in the elementary stage are undefined because there is not enough corporate awareness and scant senior management involvement. Small businesses, for example, usually comply with the applicable health, safety and environmental laws, but have neither the time nor the resources to get involved in other community and employee development activities.

In the engaged stage, policies are developed for employees and managers to participate in activities that go beyond rudimentary compliance. Senior management becomes more actively involved by developing corporate-wide policies and tasking management at all levels to perform to higher standards of corporate citizenship.

Corporate citizenship policies are more comprehensive in the innovative stage. Innovation and learning are achieved through increased stakeholder consultations and participation in forums and conferences. Corporate citizenship programs are funded and launched, usually at the functional level and with the support of senior management. There is some measure of transparency as companies monitor their community involvement and issue public reports.

Corporations incorporate and formalize citizenship activities in the integrated stage. By monitoring performance through scorecards and indicators, corporations "drive citizenship into their lines of business," according to Googins and Mirvis. The boards of directors of public companies might be involved in monitoring performance by setting up special board-level corporate citizenship committees. Other formal efforts to integrate citizenship activities include stakeholder consultations and formal training.

Companies in the transforming stage have realized that corporate citizenship makes strategic sense in developing new markets and driving sales growth. Mirvis and Googins cite ice-cream manufacturer Ben & Jerry's integrated economic and social strategy that attracts environmentally-conscious consumers. Multinational corporations strive to become better global citizens in the transforming stage. For example, drug companies, such as Merck and Novartis, donate or offer discounted drugs to developing nations, and technology companies, such as Intel and Hewlett-Packard, invest in social and education projects in developing countries where they operate.