Through data analysis, we identified three types of CSR tensions that challenged the strategic CSR integration process and four sets of management practices that balanced these tensions and supported the embedding of CSR into SmartCo’s strategy. Figure 1, along with Tables 3, 4, and 5, illustrate their empirical grounding.
Our analysis, organized according to the three CSR tensions, explicates how the identified management practices addressed the CSR tensions and supported the integration of CSR into SmartCo’s strategy. These tensions, along with the associated management practices and main organizational events, are visualized on the timeline in Fig. 2.
The Tension Between Past Understandings and Future Visions
Nature of Tension
The service-focused strategy introduced in 2009 distinguished SmartCo from the traditional approach to construction. The new strategy contrasted several prevailing assumptions about the construction business as a technical engineering operation, which created confusion among organization members over the meaning of “service,” and later, over the nature of the company’s commitment to ethical values. Referring to the data structure (Fig. 1) and Table 3, the common denominator for these tensions was the incompatibility between past understandings and future visions. Here, the CSR tension stemmed from the cognitive distance between the institutionalized understanding of construction business, on the one hand, and the espoused strategic vision of construction as a responsible service business, on the other. Involving long-standing professional identities, this resembles what Smith et al. (2013) describe as tensions of belonging (see also Smith and Lewis 2011); the tension between past understandings and future visions made it difficult for organization members to comprehend, endorse and enact the strategic visions that sought to redefine the basis of the company’s business.
Management’s Response to CSR Tension
Two management practices were central to balancing the tensions between past understandings and future visions (see Table 3). As the initiator of the strategic change process, the CEO played a pivotal role in directing CSR behavior by promoting the initially customer-oriented and later explicitly ethical business direction by personal example, and clarifying it through communication. Especially in the earlier stages, the CEO’s personal impact on the small organization was significant in instilling an open-minded and development-oriented culture in the company. As one informant recollected,
It starts with [the CEO]. […] He is visible, talks a lot with people, it is infectious. He is a good storyteller, very skilled at it. (CCO, March 11, 2015)
The CEO also set a personal example of transparency and commitment to ethical principles from early on. For instance, in 2012, the CEO learned of bribery in one of the company’s projects. This case, which the CEO reported to the police, threatened the company’s survival and cast a shadow over the legitimacy of the company’s strategic direction. The CEO’s transparent handling of the bribery case, both internally and in public, helped to take action against unethical practices. It was, therefore, instrumental in accentuating the ethical dimension of SmartCo’s strategy, and in setting a clear example within the company for ethical integrity and behavior.
Also, the CEO and top management engaged many members of the organization in strategic sensemaking. As an essential part of this management practice, SmartCo cultivated open dialogue and critical debate on strategy, which helped the management to bridge the gap between understandings inherited from the construction industry and the company’s distinctive and continually evolving strategic vision. The open dialogue, coupled with the ambiguity of the core strategy attributes, such as “service construction” and the core values of “trust, transparency, and responsibility,” maintained the strategic visions and statements in an ever-provisional state that invited organization members to interpret them in their own contexts. This, for example, allowed the construction project personnel to make sense of customer centricity and ethical values through the new collaborative practices introduced to the projects.
Among top management, this cultivated reflexivity and paradoxical thinking (see Hahn et al. 2014, 2016) by giving attention to the complex issues and targets in discussions without imposing a single uniform “truth” that could have easily suppressed the diversity of relevant viewpoints. This was evident in the heated debates among top management over, for example, the balance between the society-improving visions and demands of current construction operations, and between continuing growth and the need for stability and clarity. Rather than stifling this debate, the CEO purposively maintained a dialogue despite the conflict to move forward with the strategy:
I was in the executive group yesterday, and I said that this means you don’t have to like me; you can disagree, but we have to find an agreement together. If we let go of the diversity, if we would agree, it would be easy […], but we need it to disagree and then to find agreement. (CEO, April 24, 2015)
CSR Integration Through Organization-Wide Recognition of Tensions
Strategic sensemaking and directing CSR behavior supported organization members in linking their past understandings about construction with the future visions of the company in two ways. First, these management practices increased the legitimacy and salience of ethical values as an integral part of business strategy by integrating the ethical values and society-improving visions into the formal business strategy and mission. For example, the annual reports show how the narrative of the business strategy shifted from “service model” and “customer orientation” (AnnRep 2011) to highlight the values of trust, transparency, reliability, and responsibility (AnnRep 2013) as crucial concepts in explaining the nature and content of the business strategy. Instead of strictly separating CSR from business strategy, both the formal strategy statements and internal materials framed the ethical values as crucial elements in the successful implementation and growth of the service-focused construction business (Summary of internal workshops, September 15, 2017).
Second, the management practices cultivated recognition of the tension itself as a more permanent part of the company. Here, we use recognition to refer to the actors’ acknowledgment of the competing goals and their willingness to live with the ensuing tensions while giving both business and ethical sides of the matter an appropriate consideration. This constitutes an active response to the CSR tension; it afforded a longer-term resolution by accepting the tension as a reasonable condition of organizational life (Jarzabkowski et al. 2013; Lewis 2000). Communicated by top management and enacted through their decisions, recognition took place at the organizational level in legitimizing the ethical values and incorporating ethical elements into strategic decisions. As top and middle managers were aware and tolerant of the tensions between past understandings and future visions, they saw the navigation of such tensions as part and parcel of realizing the company’s ambitious visions. Recruitment, for example, entailed a balancing act between deep technical and business expertise (‘past’) and capability for innovative and ethical practices (‘future’):
We need experienced individuals […] to undertake larger projects; we need their expertise and experience. But we have also hired lots of younger people because they are capable of learning. […] The problem is how to give these young people opportunities for growth while avoiding the [transfer of] bad habits. (COO, March 11, 2015)
The acceptance of ethical values as a legitimate basis of business strategy also translated into concrete strategic actions, such as investments into the pipe renovation (2011) and housing business (2014) subsidiaries. These units adopted the ethical values and society-improving mission as guiding principles in the development of new solutions to customers. Also, increasing attention was devoted to new contract types and collaborative practices in construction projects as manifestations of this strategy, allowing operative-level employees to make sense of the strategy in the context of their work.
The Tension of Inconsistent Behaviors
Nature of Tension
As the new strategy, based on ethical values, gradually gained acceptance, the second set of CSR tensions emerged around the implementation of the ethical values in day-to-day activities. These tensions of inconsistent behaviors derived from an internal variance in adherence to, and enactment of, the ethical values. Especially in construction projects, the reliance on competent project managers meant that not all project teams adhered equally to the ethical values but instead perpetuated the industry’s business-focused practices (for empirical grounding, see Table 4). As such, the inconsistent behaviors resemble the tensions of level discussed by Hahn et al. (2015) as different levels and parts of the organization disagreed on ethical values and enacted them differently, without collective synchronicity in working toward a shared goal.
Management’s Response to CSR Tension
Inconsistent behaviors were addressed through various means of formalizing CSR to establish a common baseline for ethical conduct (see Table 4). A formal code of ethics was introduced in the wake of the bribery case in 2012 to prevent future wrongdoing in construction projects, and to provide a clear set of standard rules for ethical behavior. As an example, SmartCo gave a deck of ethics cards to every employee, explaining the company’s ethical principles and discussing specific cases, such as perquisite positions, business gifts, and equality. The company’s ethical principles were written into each labor contract, and each new employee had to agree to them before signing the contract. Each employee was also required to complete regular ethical training on topics such as organized crime in construction, transparency in operations, and gender equality.
In business operations, SmartCo formalized CSR by introducing non-financial performance indicators to reward personnel for their efforts to induce greater collaboration and transparency among project stakeholders. For example, in a renovation project, the fees were tied to the customer experience of the project. The top management also set an example in resolving conflicts in construction projects with priority to non-financial goals, which accentuated the importance of the ethical basis of business and set a benchmark for employees to make similar choices. Finally, the top management increased systematic supervision of construction projects to gain better control over both the business and ethical aspects of project performance. The following statement discusses how regular meetings and standard reporting, as an example, guided project managers to follow the company’s principles:
We, too, have a lot of that mindset where [project managers] don’t want to disclose all of the details […] it is difficult to change people in that sense. But you can build your operations and systems in such a way as to force everyone to disclose everything as openly as possible. (COO, March 11, 2015)
CSR Integration Through Formal Policy and Evasion of CSR Tensions
The formalization of CSR created an organization-wide policy, which clarified the expected ethical standards to the personnel. Thus, it reined in the most blatant forms of ethical misconduct by specifying clear rules on acceptable and forbidden behaviors. Also, it established proper channels for reporting observed issues. The ethical code concretized the meaning of ethical conduct for individuals and placed it explicitly on the organization-level agenda in two ways: First, it delineated a manageable set of ethical issues for the personnel to target. Second, it stipulated the “minimum standard” for ethical behavior in these issues, thus weeding out the most egregious violations of the company’s values. Hence, it became an instruction manual of sorts, as explained by an informant:
We have given the ethical deck of cards to everyone, done the training, and signed job contracts. People understand our values and that there are no exceptions. […] it shouldn’t be a surprise that something is forbidden. Even if it was legal. (Development manager, April 24, 2015)
Such formalization, however, steered toward the organizational-level evasion of the tension of inconsistent behaviors. As the ethical code rendered ethical behavior a relevant concern only in a small number of issues domains, it allowed members to continue to prioritize technical and financial aspects of the operations without having to confront the CSR tension in many areas of their work. In particular, the issues of the black economy were foregrounded at SmartCo, with clear rules on acceptable and prohibited behavior. At the same time, decisions related to project scheduling, resourcing, or stakeholder interaction, for instance, received much less systematic ethical consideration (participant observation, September 2017). As one project manager commented,
the values and ethical principles direct our actions, but it is a positive thing that each [project manager] can make a construction site their own, so long as the common principles are OK. (Field notes, internal workshop, August 31, 2017)
As the quote implies, prioritizing ethical values on issues falling outside the scope of the ethical code was left largely to each individual’s discretion. Evasion thus constitutes a defensive response; it provided a partial relief on organization members in dealing with complex pressures, but did so by suppressing the ethical side rather than embracing it as a critical element in day-to-day decisions (Jarzabkowski et al. 2013). This defensive response allowed SmartCo to work around the CSR tension by maintaining the salience of ethical themes, on specific issues, while continuing to prioritize business targets on others.
The Tension Between Competing Decision-Making Rationales
Nature of Tension
In parallel to the two CSR tensions mentioned above, the rapid growth and internal structuring of SmartCo triggered the third set of tensions, which we characterize as tensions of competing decision-making rationales (see Table 5 for empirical grounding). This type of tension foregrounds the differences between the technical and financial criteria for managing construction projects, on the one hand, and the customer-centric and ethically responsible view of the business advocated mainly by the top management and select business units, on the other. Although the tensions among competing decision-making rationales was present throughout the study period, given the spatial (and cognitive) distance between the construction sites and the headquarters, it became increasingly salient in the last three to four years when the company’s personnel grew well into the triple digits. While in earlier stages the proximity of the CEO and other executives helped navigate the ensuing tensions in the CSR integration process (see above, also Weaver et al. 1999b), the growing middle management, increasing reliance on formal control systems, and the widening gulf between the business units undermined collective commitment to common values and targets.
As such, the tensions among competing decision-making rationales resemble what Smith and Lewis (2011) describe as the tensions of performing (see also Ozanne et al. 2016; Smith et al. 2013): the organizational sub-units began to interpret and prioritize the ethical values differently in their hierarchy of goals and strategies. Also, the revised business strategy, introduced in 2017, separated the company-level development targets, incorporating the ethical values and society-changing mission, from the efficiency-focused goals of the construction business unit. This discrepancy increasingly undermined SmartCo’s strategic commitment to CSR.
Management’s Response to CSR Tension
In response to the tensions associated with competing decision-making rationales, the management intensified the use of ethical values and society-improving mission as a central part of strategic sensemaking, helping different business units to link their efforts with the same unifying purpose (for empirical support, see Table 3). Furthermore, from 2014, the management started to organize company-wide events once or twice a year to communicate the strategy more systematically. One of these events focused on organizational culture to reinforce the ethical basis and collective direction for the rapidly growing company. For example, the top management organized a company-wide series of strategy workshops in 2017 to clarify the role of each business unit in the bigger picture.
In parallel to the internal sensemaking, the ethical values and mission became more central to external communications, with the CEO making high-profile appearances in the mainstream media calling for more socially responsible practices in the construction industry. These internal and external events with converging storylines strengthened the credibility of the ethical business strategy. They provided a personally meaningful basis for members to commit to the strategic visions that emphasize ethical values and responsible practices as a means to achieve societal change. Echoing the sentiments of many employees, a project manager explained how
the values speak to us on a personal level, and we live by them. […] Our culture is good for us as people; it is engaging, offers opportunities for personal development. (Field notes, internal workshop, August 31, 2017)
Furthermore, commitment to the ethical strategy was reinforced through concerted efforts to develop the workforce (see Table 5). First, it involved an increasingly selective recruitment of new employees, emphasizing the compatibility of their personal values with those of the company. Although exceptions were made in the construction business due to its rapid growth and high demand for technical expertise (furthering all three types of CSR tensions), the positive external image of the company enabled SmartCo to cherry-pick employees that were interested in society-improving innovation. Furthermore, workforce development involved ethical training to deepen the awareness of ethical questions within the organization.
CSR Integration Through Situated Adjustment Based on Organizational Identity
These management practices reinforced members’ awareness of, and commitment to, ethical values. Besides strengthening the grounding of formal strategy in ethical values, the management practices deepened the way in which the members of the organization conceived of themselves as an organization—that is, their organizational identity (Albert and Whetten 1985). Indeed, the ethical values and society-improving mission were frequently mentioned as the central and distinctive features of SmartCo, which for many, offered a personally meaningful basis for withstanding the tensions and working toward the company’s visions.
I think the values we have, what [the CEO] talks about, trust and these things are essential, and that we start with the customer’s needs and goals and strive to find the future users the kind of buildings they need. […] Our way of thinking is respectable. It supports what I want as a person, what kind of values I have. (Foreman, April 28, 2015)
This statement reflects how the organizational identity, based on ethical values, transcended business unit boundaries and allowed organization members to see themselves as part of the organization’s mission despite the somewhat diverging targets and decision-making rationales. Concerning the tension between competing decision-making rationales, the organizational identity supported individuals in making situated adjustments to accommodate, at the action level, both the ethical and business aspects when dealing with the complex targets imposed on their work. Hence, it was an active response based on the acceptance of both the financial and ethical aspects as essential for the company’s long-term success (Jarzabkowski et al. 2013). For example, the identity-defining values offered individuals critical concepts with which to put the day-to-day challenges into perspective and to orient their efforts toward larger goals, as indicated in the following interview segment:
I understand [our vision] to mean that we are building a smarter society, in very concrete terms. […] we are breaking the existing myths and practices in the construction industry. I believe that SmartCo is a construction company for the people, and with my effort, I too try to get us past the egoistic culture, to change things through collaboration, even with our competitors. (IT development manager, January 27, 2017)
Navigating Inconsistent Support Through Confrontation and Regression
At the same time, the ongoing separation of business units and their strategic objectives undermined individuals’ ability to reconcile ethical with business goals in their work. As discussed in the context of inconsistent behaviors, the management offered little support for individuals in navigating the multiple decision-making rationales outside the scope of the ethical code. In some cases, it even set a contrarian example by tolerating unethical behaviors to secure profits in construction projects despite advocating ethical values in organizational-level strategic sensemaking.
This placed significant pressure on individuals to advocate ethical values at the action level while pursuing their business goals. Although the organizational identity provided a backbone for ethical deliberation and adjustment between the dual targets, many employees experienced dissonance between espoused values and actual priorities, and felt powerless to advocate the ethical values under the financial pressures and busy schedules of their daily work:
Participants’ sentiment: In principle, we are encouraged to be self-directive, supported to develop ourselves, but often the frame [of day-to-day targets] is so tight that we end up into a forced compromise where only the frame matters. (Summary of internal workshops, September 15, 2017)
This animation of the CSR tension was evident, for example, in informal discussions voicing complaints about situations in which the efforts to advocate the values were diluted or downright blocked by the management. This internal contradiction forced individuals to respond to CSR tensions in one of two ways in their day-to-day actions. First, some individuals were more centrally positioned and adept at advocating the ethical values by directly confronting the tension by bringing it under explicit discussion, even when it heated up the situation (Lewis 2000). In one instance, the HR team implemented measures to support employee wellbeing, including a system for worktime monitoring, which clashed with the prevalent exploitation of unpaid overtime. While some project managers accepted the new HR policy for tracking work time, seeing it as compatible with the company’s values and beneficial over the longer term, the policy also induced clashes with project managers and business unit management over the detrimental impact of the policy on profits (participant observation, December 2017).
In contrast, many individuals, especially in operative positions, were forced to ignore the ethical values and regress (Lewis 2000) to focus on financial targets alone to survive their heavy workload (field notes, informal discussion, September 1, 2017). Indeed, the disconnect between espoused support for self-directive work as per the company’s values, and the reality of strict day-to-day targets, forced compromises on everything but the short-term business targets, giving employees little option to promote ethical values, especially as the management did not give a clear signal that the ethical aspirations mattered beyond the scope of the ethical code. For example, a new foreman, who had accepted the company’s values wholeheartedly, identified an ethical issue in his current project and brought his concern to the project manager in an attempt to rectify it. When the project manager rejected this effort, citing the functioning and profitability of the construction site, the foreman took the issue to the business unit management. However, the management then disciplined the foreman for escalating the matter, although later, a top manager involved in the case admitted that the foreman had been correct to demand more ethical behavior (Field notes, informal discussion, October 5, 2018).