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The CSR models for Toyota, Nissan, and Honda Case Study


Introduction

Corporate success greatly depends on the success of corporate social responsibility (CSR) initiatives. Implicit in the CSR discipline is the acknowledgement that most companies have to fulfil their corporate responsibilities to all stakeholders to succeed.

CSR falls firmly within this stretch of corporate responsibilities, and it manifests as an implicit social contract that different companies share with their stakeholders.

Despite the acknowledgement of CSR as a key corporate responsibility, many companies do not have a standard criterion for executing CSR in business.

More specifically, there is a lack of uniform criterion for measuring the benefits of CSR in business, and the alignment of CSR success with company profitability.

Companies that operate in the Malaysian automotive industry experience the above complexities when introducing their CSR initiatives.

The intense competition and the challenging market landscape of the Malaysian automotive industry complicate the implementation of the CSR initiatives.

For example, the Malaysian government has consistently intervened in the industry to protect the local car brands (Proton and Perodua) from foreign competition (Augustine 2013).

This government intervention has consequently led to the segregation of the car market into national and foreign brands.

Japanese and Koran car manufacturers control a significant part of the Malaysian foreign car market. Competition from new car manufacturers like Honda has offered more competition to traditional car brands like Toyota and Nissan.

For example, Honda offers a car warranty of 3000,000 kilometres on its cars, while traditional brands like Toyota offer only about 50,000 kilometres of warranty (Augustine 2013).

Other car manufacturers like Nissan have also joined the fray of competitive marketing by offering competitive prices of their products and enviable performance features of their cars.

The dominance of foreign car manufacturers in the Malaysian car market has attracted a lot of attention from governments and the local community regarding the improved profitability that such companies continue to enjoy in the Malaysian market.

Consequently, there has been an increased scrutiny of such companies on their CSR responsibilities, and their commitment to “give back” to the community.

The influence that western car manufacturers have on car manufacturing companies in the East has further fuelled this curiosity (Augustine 2013). Consequently, most car manufacturers that operate in the Malaysian automotive market have developed unique CSR models.

This paper compares the CSR models for Toyota, Nissan, and Honda. The emphasis of this paper is on their areas of similarity and differences (in CSR approaches).

This paper also explores the main issues that challenge the execution of CSR projects in Malaysia and how Nissan, Honda, and Toyota are managing these issues. Finally, this paper outlines the future direction of CSR projects in the Malaysian automotive industry.

Pyramid of Corporate Social Responsibility

Companies have always realised the importance of corporate social responsibility since the 1950s. However, complex industry dynamics have made it difficult to understand the complex application of CSR in today’s fast-paced business environment.

From this complexity, many researchers have explored the structure and nature of CSR; however, Carroll’s depiction of CSR is the widely accepted model of CSR analysis (Sachs 2005).

Carroll’s CSR model suggests that most companies share different types of responsibilities (economic, legal, ethical, and philanthropic responsibilities), which define their CSR initiatives. The economic responsibility is the main CSR because it supports other forms of CSR initiatives.

The legal responsibility however shares the same level of importance as the economic responsibility. Since the law cannot regulate all business practices, ethical responsibility suggests that the companies should “do right” by the society, even without laws that regulate such activities.

The last responsibility, as outlined by Carroll, is the philanthropic responsibility. This responsibility requires companies to participate in the educational, social, recreational, and cultural well-being of the society (Sachs 2005). Carroll’s CSR model manifests below

Regulators

Some analysts have criticised Carroll’s pyramid model as being too simplistic and theoretical, but other people have supported the model for showing the fundamental framework that informs CSR initiatives (Sachs 2005).

This is why people have used the model in CSR understanding for more than two decades now. Nonetheless, the success of the model does not depend on its theoretical understanding, but rather, on its practical application.

Main Stakeholders in the Industry

Regulators

Direct pressures from regulators always affect the automotive industry. These regulators are usually comprised of automobile associations and government bodies.

The government is especially a key stakeholder in the Malaysian automotive industry because the government protects the public interest in the business (Augustine 2013). These interests may span through economic, political, environmental, and social interests.

For example, it is in the interest of the government for car automakers to adhere to environmental regulations to prevent pollution and environmental degradation.

The government may control the activities of such companies through taxation, environmental law, and similar legislative approaches.

Investors

A close look at the Malaysian automobile industry shows that there is a very close link between the financial market and the industry. Investment funds, insurance companies, and advertising agencies are a few examples of the main types of investors in the Malaysian automobile market.

Many parties would be highly interested in seeing the growth of the Malaysian automobile market. A large group of shareholders would also like to see the growth of the Malaysian automobile industry curtailed.

Such stakeholder groups may include environmental bodies and non-governmental organisations. These shareholder groups may introduce significant changes in the industry.

Community

The Malaysian community is an important stakeholder of the country’s automobile industry. Indeed, car automobile businesses work within the community.

The community therefore supports the activities of such companies because without their support, it would be difficult to sustain the activities of these companies.

It is therefore important for companies to work together with the community because their relationship is often beneficial for both parties.

Some of the benefits associated with community-corporate partnerships include better decision-making and legitimacy for the activities undertaken by the car automakers.

Consumers

Automobile consumers outline a very important stakeholder group for the Malaysian automobile industry. Their importance exemplifies through the fact that the consumers are the main users of the products (cars).

Their safety, approvals, and decisions to buy the products create a motivating industry factor that defines industry standards (Augustine 2013). For example, an increased appetite for safety features would force car manufacturers to supply car models that have a high safety standard.

Similarly, if the consumers show a high propensity to spend, the car manufacturers would probably be motivated to supply high-end luxurious car models to the market.

These issues are bound to define the characteristics of the industry. Consequently, customers are important stakeholders in the Malaysian automobile market.

CSR Approaches for Toyota, Nissan, and Honda

Toyota

CSR projects undertaken by Toyota only outline part of the CSR project undertaken by many Japanese companies in Malaysia. Toyota’s CSR projects have mainly focused on preserving the environment.

For example, Toyota introduced the Toyota Eco-Youth Program, in 2009, to empower Malaysian consumers to protect the environment by recycling, re-using, and reducing their energy consumption (Toyota-Global 2013).

Toyota launched this initiative by collaborating with Malaysian education institutions to inculcate the values of environmental conservation to young Malaysian students at an early age.

Still focusing on the partnership between Toyota and Malaysian educational institutions, Toyota has also embarked on a spirited campaign to educate young Malaysian children about the hazards of the road.

Toyota’s CSR initiatives manifest the mutual relationship that Malaysia has shared with Japan since the former Malaysian Prime Minister, Mahadhir Tun, announced that Malaysia should look east and borrow the Japanese culture of giving and philanthropy (Toyota-Global 2013).

The good relationship between Malaysia and Japan has fostered further diplomatic ties between both countries.

Therefore, many stakeholders in the Malaysian corporate market should benefit from the enviable work ethics and moral conduct of the Japanese people, which informs their CSR activities in many parts of the world, including Malaysia.

Honda

Like Toyota, the CSR initiatives for Honda gear towards supporting the education sector. Honda’s initiatives in the education sector aim to provide scholarships to underprivileged children.

The fund was set up in 2007 to provide a full and non-binding scholarship program for underprivileged children in Malaysia who are determined to pursue their education careers (Honda-Malaysia 2013).

For example, in 2010, Honda provided 20 scholarship programs for underprivileged children (Honda-Malaysia 2013).

The United Nations Development Program, through an open initiative (Honda Dream Fund), supported this scholarship program. Honda chose its participants from a group of about 1,700 applicants (Honda-Malaysia 2013).

Honda’s CSR initiatives stem from the dreams of the company’s founder who said, people should have an opportunity to pursue their dreams, regardless of their background (Honda-Malaysia 2013). Honda’s philosophy is therefore enshrined in pursuing the “power of dreams.”

By helping underprivileged Malaysian children to pursue a good education, Honda believes that it “gives back” to the community by improving the quality of human capital in the country. Today, Honda is proud of five graduate students who have benefitted from the program.

These graduates hold admirable jobs, which enable them to help their families as well (Honda-Malaysia 2013).

Through the ripple effect that the Honda scholarship program has on the families of the young graduate students, Honda believes that its CSR initiatives are not only concentrated on helping the youth, but their families as well.

Therefore, Honda’s CSR initiative spans wide within the community.

The CSR projects for Honda Malaysia not only confine to the provision of education scholarships to needy students in Malaysia, but also stretch into supporting conservation efforts in the country. For example, Honda is involved in a popular initiative dubbed the “Rhino Rescue” project.

This project aims to provide financial resources to the World Wildlife Fund (Malaysia) to protect endangered Rhinos in Malaysia.

For example, in 2006 Honda pledged more than RM5 million to WWF in support of its conservation efforts in Peninsular Malaysia and Sabah (WWF-Malaysia 2013). Honda expected this funding to sustain a five-year project on the protection of endangered rhinos.

The main activities that use the funds are patrolling, surveillance, publishing reports and papers on conservation efforts, and supporting consultative efforts (for developing workable plans for the conservation of these rhinos) (WWF-Malaysia 2013).

Comprehensively, Honda aims to create awareness regarding the importance of conservation efforts not only to protect the endangered rhinos in Malaysia, but also to protect other endangered species in the country too.

Honda‘s efforts in this initiative divide into several programs such as the rhino rescue school program, which aims to impart knowledge to young Malaysian students about the importance of conservation (WWF-Malaysia 2013).

Teaching biodiversity and the importance of understanding how human activities threaten environmental sustainability outlines some of the topics covered in the above program. Through such interactive sessions, the pupils learn how to contribute to conservation efforts.

The “Sumatran rhino discover road show” has also achieved the same outcome as the rhino rescue school program by introducing environmental road shows throughout Malaysia to sensitise the population regarding the importance of conserving the environment (WWF-Malaysia 2013).

The road show creates awareness and understanding regarding the importance of conservation. The show also communicates the importance of protecting endangered rhinos in Malaysia.

The involvement of children in conservation efforts also emerges in these road shows because there are several fun events for children that equally characterise the road shows.

Lastly, Honda’s conservation efforts channel through an annual “environment and I” essay and photo contest. The contest is normally an annual event that supports creativity in essay and photo creations.

For example, in 2008 most primary schools in Malaysia participated in the essay and photo creations by developing the best essays and photos that communicate the importance of environmental conservation (WWF-Malaysia 2013).

The competition required the participants to write a 400-800 word essay that included a photograph that shows the participants and their family members participating in a conservation effort. This program has so far received tremendous support from most Malaysian institutions.

Its user-base has always grown over the years. Now, Honda receives more than 600 entries from students across Malaysia to participate in the competition (WWF-Malaysia 2013).

Nissan

The CSR initiatives for Nissan are mainly enshrined in the principles of mutual respect and ethical values for the community. Like Toyota and Honda, Nissan also believes in the importance of “giving back” to the community.

However, unlike Toyota and Honda, Nissan believes that its CSR initiatives should not confine within one social or economic aspect, like education. The company believes in expanding its CSR initiatives in other aspects of community development, like the environment.

Nonetheless, the focus of Nissan’s CSR project is community, environment, and employees.

Through these social and economic aspects of community development, Nissan believes that it may easily connect with the community and receive immense community support in the same regard (DMC 2013).

Since Nissan’s CSR initiatives are diverse, part of the company’s CSR project has been the direct delivery of food and other essential commodities to underprivileged communities. Similar to this initiative is the Nissan treasure hunt event, which has existed since 1990.

The event has happened in several parts of Malaysia, including Kuala Lumpur, Johor Bahru, and Penang (DMC 2013). The most recent treasure hunt occurred in Penang, where more than 30 Malaysian teams participated.

The teams delivered food and other basic commodities to several underprivileged communities in rural Malaysia as they participated in the hunt.

For example, in the 2011 hunt, all the 32 teams that participated in the event delivered food and other essential commodities at Ruma Sejahtera Permatang before they proceeded to the next stage of their treasure hunt (DMC 2013). Nissan considers its treasure hunts as successful CSR initiatives.

However, the company’s management realises that much of this success mainly depends on the loyalty of its customers. Therefore, through the treasure hunts, Nissan believes that it rewards its most loyal customers.

Nissan’s CSR initiatives have also focused on empowering young Malaysian students who aim to specialise in design to perfect their skills in the same discipline.

For example, since 2007, Nissan Malaysia has held an imagination factory project to help Malaysian students to learn the intrigues of vehicle design.

This initiative has created a platform for the company to share its experience in vehicle design and manufacturing with young Malaysian students, to improve their skills in automotive design.

This forum includes several interactive workshops and clay modelling demonstrations that some of the most experienced designers and modellers supervise. In the workshops, the students have a rare opportunity for translating their automotive design ideas into real products.

Nissan is among the first companies to have such an initiative in Asia. However, the company has undertaken the same CSR initiatives in other Asian countries such as Taiwan, China, and Indonesia.

Similarities and Differences in CSR Projects

Nissan, Toyota, and Honda seem to share many similarities in the contents of their CSR projects. The CSR projects for the three companies manifest the principles of “giving back” to the community.

However, all the three companies have adopted a sharp focus on improving the education standards of young Malaysian students. Nonetheless, the three companies seem to adopt different methodologies in improving the well-being of Malaysian students.

Nissan, for example, adopts a very focused approach of supporting the educational goals of design students, while Honda adopts a more general approach of providing an opportunity for a selected group of young underprivileged students to pursue their education.

Therefore, even though the companies adopt different methodologies to boost the education sector, they are very committed to contribute to the development of the country’s education system.

Another area of key focus for Nissan, Honda, and Toyota is environmental conservation. Again, the companies adopt different methodologies for supporting conservation efforts, but all the companies show a strong commitment to support conservation efforts.

For example, Honda has shown an immense commitment to protecting Malaysia’s rhinos, while Toyota has demonstrated the same level of commitment to reduce the country’s carbon footprint, by introducing eco-development programs.

Nissan’s CSR approach however differs with the Honda and Toyota’s CSR approaches because it adopts a direct CSR approach, unlike its competitors. For example, part of the company’s treasure hunt initiative includes providing food donations to needy communities.

Toyota and Honda do not pursue this strategy because their CSR approaches mainly aim to empower communities. Toyota’s CSR approach also differs from Honda and Nissan’s CSR approaches because it is mainly one-sided.

In other words, Toyota’s CSR projects aim to reduce environmental pollution. It accomplishes this goal by pursuing the CSR initiatives that align with the company’s main business focus – car manufacturing.

Nissan and Honda’s CSR initiatives are dual in nature because they strive to improve education standards and environmental conservation. Comprehensively, the above dynamics show the main areas of similarities and differences among Nissan, Honda, and Toyota’s CSR projects.

Critical Issues for Executing the CSR initiatives

Failure to Achieve Desired Results

Among the main challenges of supporting CSR initiatives in Malaysia is the failure of the CSR projects to achieve their intended goals. For example, the donations made by Honda to WWF and the protection of Rhinos may not achieve the desired results if the money is poorly managed.

Several projects have failed to achieve their intended results in this manner. Nissan, Toyota, and Honda realise that the failure to achieve desired results may be because of several procedural issues that are specific to the companies.

Therefore, every company ensures that it properly manages its CSR project. For example, lower level managers are usually actively involved in the development and execution of Nissan’s CSR initiatives (DMC 2013).

Through this framework, it is unsurprising that most CSR initiatives for Nissan are all-inclusive. This framework underscores the importance of CSR initiatives as an important part of the way Nissan does its business – through its planning, implementation, and execution of future strategies.

Insufficient Information about the benefits of CSR

While this paper appreciates the importance of CSR initiatives, many companies in Malaysia do not appreciate the importance of CSR to their bottom-line operations (Augustine 2013). Therefore, some companies participate in CSR initiatives as a “by-the-way.”

This attitude is dangerous for the attainment of CSR goals because companies fail to pay close attention to their CSR initiatives. In other words, some companies may fail to follow up on the progress of their CSR initiatives, thereby leading to their collapse or mismanagement.

For example, Honda’s scholarship program may fail to empower deserving students if it the company does not follow the progress of the students in their academic pursuits.

Nonetheless, the lack of insufficient information about CSR initiatives does not seem to affect Nissan, Toyota, or Honda. The three companies seem to have a proper understanding of CSR initiatives.

This is why they have all associated themselves with big CSR projects in Malaysia. Their commitment to their CSR projects also seems to be unrivalled by other companies that have a similar status in Malaysia.

Lack of Measurable Targets

All CSR goals should be measurable. The lack of measurable targets for CSR initiatives create potential problems for the implementation of CSR initiatives because it is difficult to quantify if a CSR initiative has been successful or not (without measurable targets) (Augustine 2013).

The lack of an accepted criterion for measuring CSR goals create room for mediocrity, as some CSR programs receive immense resources without equal results.

Honda, Nissan, and Toyota have addressed this issue by assessing the outcomes of their CSR initiatives through a comparison with other CSR initiatives in other parts of the world.

Therefore, the successes of their CSR initiatives are often comparable to other CSR initiatives in China, Taiwan and other Asian countries.

Conclusion

Nissan, Toyota, and Honda seem to have a firm grasp on the importance of CSR in sustaining their corporate operations. All the companies have especially focused on environmental sustainability and the promotion of education as their main areas of focus.

From this background, the future of CSR shows that community emphasis may bring more benefits for companies.

Supply chain issues may also emerge as important areas of concern for future companies as they become more responsible about the safety and impact of their products on the community.

Considering the educational focus of the above-mentioned companies, more companies (especially in the automobile market) are soon going to pay a closer attention to poverty alleviation as a key CSR area. Broadly, these issues define the future of CSR in Malaysia.

References

Augustine, D. 2013, Overview of the Malaysian Automotive Industry – 2013 and Beyond. Web.

DMC 2013, Nissan Malaysia Continues Engaging Customers with Exciting Events. Web.

Honda-Malaysia 2013, Honda Dreams Fund Announcement. Web.

Sachs, S. 2005, ‘A CSR framework due to multiculturalism: the Swiss Re case,’ Corporate Governance, vol. 5 no. 3, pp. 52 – 60.

Toyota-Global 2013, Toyota Eco Youth (Malaysia / Indonesia). Web.

WWF-Malaysia 2013, Honda Malaysia. Web.

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