1. Bachelor thesis – The Impact of Different Models of Capitalism on Corporate Social Responsibility
Agnė Valeckaitė – Institute of International Relations and Political Science – Vilnius University
Summary
Even though the concept of corporate social responsibility (CSR) is being formed
universally, the practice of CSR is still diverse across the countries and continents. Usually these
differences are explained by one or another institutional factor rarely using wider or more
systematic theoretical approaches. This paper examines the connection between political,
economical and other institutions altogether and corporate social responsibility. Using theoretical
models of coordinated and liberal market economies from Varieties of Capitalism theory, the
concept of CSR in different countries is analyzed. Having in mind that the concept of CSR is
different among countries the main question here is how the institutional environment affects
CSR initiatives that companies decide to undertake.
The Varieties of Capitalism theory has not been used to explain CSR processes so far. It
introduces two theoretical models of market economy that represent two different institutional
environments. Coordinated market economy has more institutions that have influential power for
the private sector processes. The relations among companies and other actors (society,
employees, and political representatives) are more institutionalized. Trade unions, business or
employers’ associations have more influence in monitoring the behavior in the network,
sanctioning as well as simply exchanging information among the different actors. Meanwhile
liberal market economy is mostly depending on the market as its main institution. Firms tend to
coordinate their activities depending on the supply and demand so they have to be more dynamic
and able to adapt quicker.
Corporate social responsibility in this paper is understood as “considering the needs and
interests of others who may be affected by business actions. In so doing, businessmen look
beyond their firm’s narrow economic and technical interests”. In order to distinguish different
fields of CSR and show the diversity of the concept the 10 principles of Global Compact (one of
the biggest initiatives promoting CSR policies in the world) that divide CSR into four spheres:
human rights, labor, environment and anti-corruption.
Companies in liberal market economies are more influenced by the changes in the market
than official institutions. Since market is rather dynamic, companies must be able to adapt
quickly if they want to survive and succeed. CSR policies are also certain answers to some
emerging issues that companies feel they need to react. In order to satisfy most of the rising CSR
needs companies must have basic CSR strategies in all of its fields. So the first hypothesis is:

2. Bachelor thesis – The Impact of Different Models of Capitalism on Corporate Social Responsibility
Agnė Valeckaitė – Institute of International Relations and Political Science – Vilnius University
1. The influence of market (as an institution) on companies in liberal market
economies determines that their concept of CSR evenly combines all four of its’ fields.
Companies in coordinated market economies are more dependent on the institutions in
the country. Knowing that much bigger attention here is dedicated to employees (through the
bargaining of trade unions and the monitoring of different associations) the second hypothesis is
introduced:
2. The influence of trade unions and the monitoring of business and
employers’ associations in coordinated market economies determines that companies
relate CSR mostly with labor field.
Finally, having in mind that companies in coordinated market economies usually invest
in long-term products and initiatives, while firms in liberal market economies prefer short-term
investments that can bring quicker results, the third hypothesis is introduced:
3. Different priorities about investing in innovations determines that
companies in coordinated market economies tend to invest in long-term CSR projects OR
innovations in their production line while companies in liberal market economies ten to
invest in short-term projects and initiatives.
After analyzing the reports of companies in three different countries (Germany, USA and
Great Britain) some tendencies were captured. The first hypothesis was confirmed while the
second and the third were partly confirmed.
It is obvious that there are certain differences in the three countries analyzed, especially
concerning the width of the CSR concept among companies. In coordinated market economy
companies seem to emphasize on certain CSR topics (in this particular case – employees and
environment) that tend to be more institutionalized; while companies in liberal market economies
seem to be covering all the mentioned CSR fields more equally. This shows that institutions tend
to limit the understanding of CSR field, even though they are not able to have direct impact on
these processes.
This paper shows that Varieties of Capitalism theory is suitable to use while analyzing
corporate social responsibility and can explain the tendencies that were found. Still, in order to
enrich this theory with CSR topic, more detailed and universal research is needed to include
different CSR concepts as well as more diverse companies.