1 Introduction

Corporate social responsibility (CSR) has gained visibility and importance for firms over the last decades. Increased pressures on firms to be more sustainable and responsible have resulted in many efforts inside and outside firms to consider societal responsibility and accountability. To support companies with this, several national governments and international organisations such as the ISO, have created multiple codes of conduct and voluntary guidelines for implementing and maintaining CSR within an organisation. Despites these efforts, the actual way CSR is filled in, differs from firm to firm. On top of that, because of the interrelatedness of value chains, companies are forced to consider the whole chain when implementing and exercising CSR. This so-called value chain responsibility (VCR) also shows diversity.

In general, CSR and VCR relate to established firms with known products and markets. This raises questions about the viability of CSR and VCR in the case of new technologies, where products, markets and even firms do not yet exist. In this chapter we investigate this question for the case of nanotechnology, a new technological field with many promising applications. A central characteristic is that substances have significantly different properties at the nano scale than they do at the micro or macro scale (Shelley 2006). These different properties and the small particle sizes may offer new functionalities, but have also caused reason for alarm because of possible health and environmental risks (de Jong et al. 2005). In addition, new technologies often come with questions about social, economical and political implications (Swierstra and Rip 2007). Both the health and environmental risks as well as broader societal and ethical questions about the applications of nanotechnology are currently a topic of debate.

Nanotechnology, as a new technology, thus raises new questions of responsibility and new implications for the CSR of companies. It raises the question how existing companies handle their CSR in the light of speculative technologies, but also how with new technologies new companies emerge. These new companies, in their turn, will have to form new value chain linkages, which will be speculative at the start.

This research thus intends to contribute to the current CSR and VCR literature which focuses on existing companies with existing technologies. We will describe how CSR is handled in more speculative and uncertain situations. We looked into this in three case studies of companies dealing with nanotechnology in their value chain in the Netherlands. All cases deal with nanotechnology, and differ in the stage of development of their company and value chain.

First, the current literature on CSR and VCR and the existing codes of conduct will be discussed. We then present and analyze the three cases. We conclude with a discussion on how our findings contribute to the current literature.

2 Theory

Most literature reviews mark the starting point of corporate social responsibility with the work of Howard R. Bowen from 1953 (Bowen 1953). Bowen noted that the largest companies at that time had the power to make decisions that influenced the lives of many citizens. He then argued that they should also take responsibility for their societal influence.

Despite the appreciation for Bowen’s work, it took quite some time for firms to actually start implementing social responsibility practices. When in the 1980s and 1990s also the notion of sustainability started to gain more interest and this was connected to the responsibilities of companies, practices of CSR were established. From that time on, empirical studies have been conducted on how CSR was filled in (Carroll 1999).

Different studies have mapped the different views on CSR through history (Garriga and Melé 2004; Carroll 1999). An often used definition is: ‘(1) meeting objectives that produce long-term profits, (2) using business power in a responsible way, (3) integrating social demands and (4) contributing to a good society by doing what is ethically correct’ (Garriga and Melé 2004).

This definition still leaves many blank spots for companies wanting to implement CSR practices. How should ‘doing what is ethically correct’ be filled in for instance, when situations can differ?

Pinkston and Carroll (1996) respond to this by arguing that CSR is elusive because it will differ with the values and beliefs of each point in time. To address these different values and beliefs, different stakeholders’ perspectives can be taken into account (Snider et al. 2003). This corresponds well with the notion of considering the rest of the value chain when looking at CSR.

In general, the value chain can be described as the ‘full range of activities which are required to bring a product or service from conception, through the different phases of production (involving a combination of physical transformation and the input of various producer services), delivery to final consumers, and final disposal after use’ (Kaplinsky and Morris 2001, 4) When considering responsibility, it makes sense to adopt a broad view of the value chain that is not limited to companies which produce the product from raw material to the end-product, but also agents which are involved in other ways, such as through collaborations. In other words, it makes sense to consider the ‘ecosystem’ in which the value chain is embedded. Our case studies of value chains indeed start from an exploration of the whole ‘ecosystem’ in which the product is produced.

The need to consider the social responsibility of the entire value chain instead of just the CSR of the company itself, is something which has been addressed only in recent years. Phillips and Caldwell (2005) note this and argue that, adding to the notion of CSR, there is something such as value chain responsibility (VCR). They address the idea that the current large and international value chains have increased in size and power, but that the notion of a changing responsibility in these networks, is lagging. Increasingly, also the public demands that large companies take their responsibility for the entire value chain. One of the examples is Nike. Nike’s manufacturing of clothing and running shoes was done by subcontracting companies in Asia, where bad labour circumstances were found – e.g. child labour and slave-like conditions. Nike argued that they could not change these circumstances since they did not own these companies; they were merely suppliers to Nike. The unwillingness of Nike to change this, however, led to large public protests among the USA and to some large university sporting teams to boycott the use of Nike sportswear. Nike eventually gave in and made agreements with the suppliers to improve the labour situations.

The interesting notion here is that Nike did not have any legal responsibility or formal liability in this case. However, since they are seen as a powerful player the public opinion was that they were responsible anyhow. A powerful player is able to make changes for the better, according to the popular argument. Nike eventually gave in to this, not only because the boycotts decreased their profits, but mainly because of the reputation damage that was being done.

The work of Phillips and Caldwell (2005) mainly addresses examples of large and well-known companies such as Nike, McDonalds, Gap, and Starbucks. They consequently recommend that more work is needed to study the VCR of smaller firms or firms with a less public profile. While the responsibility issues might be less visible in firms with little public profile, they do exist and are interesting to look into.

Currently, most empirical studies on CSR investigate the link between competitive advantage and CSR (McWilliams and Siegel 2001; Porter and Kramer 2006; Sen and Bhattacharya 2001). Other research does follow up this research with more strategic implications, including new technological innovation. McWilliams et al. (2006) here show with the example of British textile industry in the nineteenth century that new technologies can change the social responsibility perspective. The British textile industry was namely only able to abandon child labour practices after new machines were introduced. In general, however, the notion that CSR and VCR could change due to new technological developments is lacking in the current literature. Some articles do address the topic of how to innovate – including creating new value chain linkages – while being socially responsible (McWilliams et al. 2006; Luo and Bhattacharya 2006). Still, the current literature on CSR and VCR mainly describes practices of firms with proven technologies in existing value chains, where sometimes these practices might be extended to new and more speculative value chains. In this chapter we will make a further step and investigate the issue of social responsibility in emerging technologies and speculative value chains. While so-called studies of ethical, legal and social aspects (ELSA) of promising technologies tend to focus on policy purposes, we address the responsibilities of firms and seek to extend the current CSR and VCR literature to new technological development and the value chains that emerge with this (Fig. 8.1).

Fig. 8.1
figure 1

Literature gap in VCR and CSR literature

Full size image

In doing so, our research also follows up on the recommendations of Phillips of Caldwell (2005) to look at also smaller firms. This combines well, since new technological developments often cause new and small technological start-ups, where the value chain is still highly speculative.

3 Formalised Forms of CSR

Responsibility is a difficult concept for companies to deal with. Individual responsibility is something which most people can grasp and decide upon, based on their individual moral beliefs and values. But it is difficult to extend this individual concept of responsibility to the responsibility of a company. Two other aspects also come into play when looking at the company’s responsibility: it has to be communicable among the whole company and it has to relate to practicalities of everyday practices.

For these reasons, several formalised forms of CSR have been developed during the last decades. Also governments and supranational bodies such as the EU have been stimulating the development and implementation of these guidelines. A guideline does not only make responsibility communicable within the company, but also makes clear to the outside world how the company is handling its CSR. This means that the CSR can be evaluated.

Since this research focuses on companies and value chains in the Netherlands, some Dutch national initiatives for CSR are described here. Furthermore, different international guidelines are added.

The Dutch Corporate Governance Code (CGC), which used to contain only internal good governance practices, has now been extended with corporate social governance guidelines. Every company that is stock listed has to comply with the CGC, which means they yearly have to report how they implemented the principles from the CGC. This code is non-binding: the companies do not have to comply with all the principles, but if they do not, they have to justify this (Dutch Corporate Governance Code 2008).

Another initiative is the Transparency Benchmark, which is initiated by the Ministry of Economic Affairs, Agriculture and Innovation. This is not a CSR guideline in itself, but it obliges companies to be transparent in the CSR activities and reporting. The 500 largest companies of the Netherlands are included in the research group. Smaller companies can also participate on a voluntary basis (Transparantie Benchmark 2013a).

Furthermore, the Dutch Social and Economic Council produced some advice for the Dutch government on sustainable globalisation, which also addressed the value chain responsibility of companies (SER 2008). The Dutch government followed this advice and made a recommendation for CSR for companies which are facilitated by the government. This advice gave some general guidelines for CSR and also included the notion that the value chain should be seen as a primary responsibility (van Heemskerk 2008).

Internationally, several CSR guidelines have been developed. Recently the ISO (international Organisation for Standardisation) has made the ISO 26000 code, ‘Guidance on social responsibility’ (ISO 2010) which gives information for organisations to understand social responsibility and practical guidelines for implementing it. ISO 26000 is a voluntary guideline for companies and is also based on self-assessment, so a public evaluation of it may be difficult.

Since the responsibility of nanotechnology in particular could relate to the possible health and environmental concerns, guidelines for the use of certain substances are relevant as well. Regarding possible harmful materials, the REACH list is the most used standard. It deals with the Registration, Evaluation, Authorisation and Restriction of Chemical substances (EC 2013). The REACH standards are made and controlled by the European Chemical Agency (ECHA). Also nanosubstances fall under the scope of REACH, because any potentially harmful substance needs to be submitted to REACH regulation, irrespective of its size. However, the following is noted in the Frequently Asked Questions about REACH:

The evolving science of nanotechnology may necessitate further requirements in the future to reflect the particular properties of nanoparticles (ECHA 2013).

This suggests that the ECHA is considering whether the current REACH legislation is broad enough to include nanosubstances or that a new legislation needs to be developed. Companies will thus have to decide for themselves what they consider a responsible way to deal with these nanoparticles.

Apart from these guidelines, companies can also have guidelines that they have developed themselves or relate to more informal CSR practices. In small companies, the need for guidelines will be less, since the CSR of the company will then be closely intertwined with the individual responsibility of the employees.

4 Case Studies

To study how social responsibility appears in companies which deal with nanotechnology, three cases were selected. The first case refers to a large company, which already has an established value chain, even though the product they are developing is new. The second case has its value chain in place, in principle, but there is room for company growth and value chain extension. The last case is a small starting company, where value chain linkages are still very unclear.

First, interviews were conducted within the case companies. From these interviews, the value chain links were revealed and mapped. Secondly, we interviewed many other agents in the value chain to triangulate our findings on social responsibility.

All interviews were recorded and were consequently transcribed. From these transcriptions, descriptive case outlines were made. These described how the companies filled in CSR and VCR with arguments, routines and practices.

4.1 Social Responsibility in Different Stages of Development

The first case company is Philips, a large organization, which used to focus on consumer electronics, but has shifted the emphasis to health and wellbeing technology. Now healthcare products represent about 40 % of Philips’s business revenues. Philips is a large and international company, with total assets of over 30 billion Euros and 119,000 employees in more than 60 countries. One of their recently established business ventures, hand-held diagnostics, seeks to develop a handheld diagnostic device based on the use of nanoparticles: the Magnotech concept.

The technology is based on magnetic nanoparticles, which are coated with the appropriate ligand molecules for the target protein molecules that are to be measured. A small sample of blood or saliva can be inserted in a cartridge which can in turn be inserted in the device. In the device the magnetic nanoparticles bind to the target protein molecules in the sample blood or saliva. By turning magnets in the device on and off, a fast and accurate separation between the bound and unbound particles can take place (Philips.nl 2013a).

Even though the product has not yet reached the market stage, it can profit from being within the large network of Philips. In the supplier field, links with the suppliers of the nanoparticles have been made. Philips has chosen to not produce the nanoparticles themselves, since this is not their core capability. When the product reaches its marketable phase, it can also profit from Philips’ existing value chains with its market and sales channels. For this product, Philips already has ties with many hospitals and medical professionals, because of their earlier healthcare products. Figure 8.2 shows the value chain of Philips Magnotech.

Fig. 8.2
figure 2

Value chain of Philips Magnotech

Full size image

Figure 8.2 also illustrates that Philips is involved in many collaborations, both bilaterally (e.g. with suppliers and partners) and within public-private partnerships such as CTMM (Centre for Molecular Medicine). Here they also have ties with multiple hospitals (in this research UMCU and AMC participated).

CSR within Philips is addressed with a formalised procedure. They have an elaborate sustainability program, which is renewed every 5 years, called EcoVision (Philips 2013b, c). Ecovision includes environmental and societal aspects. Philips is also incorporated in the Transparency Benchmark, in which it has scored in the top-20 since 2005. Philips was ranked in the second place in 2010 and 2011 and in the third place in 2012 (Transparantie Benchmark 2013b).

Furthermore, Philips has formalised procedures for organising responsibility among the value chain. Every supplier of Philips has to agree to the Supplier Sustainability Declaration that Philips has. In this declaration similar guidelines as in the EcoVision program are addressed (Philips 2012). Philips also audits the suppliers to see whether they actually live up to these standards.

The interview brings forward how the EcoVision program sets preconditions that assure that social responsibility is handled correctly. This means that the individual employees do not have to be concerned with CSR much:

To say that it would have an influence on day-to-day activity, would go a bit too far.

Furthermore, the power of Philips as a large company is apparent when referring to their suppliers and VCR. Philips has the power to demand social responsibility from their suppliers:

With partners social responsibility needs to be negotiated (…) But this is very different with suppliers: those you can just impose your policy on.

Philips’s strict control of their own social responsibility and that of their value chain is intertwined with strategic considerations about reputation. Philips is a large and well-known company and does not want its name to be damaged, in the way Nike’s was in the earlier example. Furthermore, being actively involved in social responsibility also helps to positively affect Philips’ reputation. Philips ‘advertises’ with their sustainability and responsibility goals on their website.

For Philips, being involved in a nanotechnology value chain now does not change their CSR and VCR perspective. Concerning health and environmental risks of nanotechnology, they rely on REACH regulations. Even though some new value chain linkages had to be made for this new technology – i.e. with the nanoparticles suppliers – Philips has all the control over its own and its value chain responsibility.

In our second case, TSST, we studied a much less developed value chain. TSST is a small company, which began as a university spin-off in 1998 (TSST 2013). The University of Twente needed specific deposition equipment for their nanotechnology research and since they could not find a suitable supplier, the science department decided to have some employees develop and build the machine themselves. The final machine turned out to be of such good quality that universities and research institutes all around the world requested to also have one built. Thus a spin-off was created to develop these Pulsed Laser Deposition Systems. These machines are currently one of the main research instruments for conducting nanotechnology research.

The machines which TSST builds are specifically built to customer preferences and take approximately 6 months to make. The supplier side of the value chain of TSST consists of roughly two groups: suppliers for ready-made catalogue parts, these are usually large and international companies and specifically designed machine parts; these are local and smaller companies. In their start-up phase TSST was within a project of STW (‘Stichting Technische Wetenschappen’, in English: Foundation for Technical Science). STW links university research which has commercial potential with so-called ‘user-committees’. These committees comprise of potential interesting consumers for the technology. The customers of TSST are all universities or research institutes from all over the world. They, however, do not have regular customers because it is rare that a consumer needs a second machine. For the first time in its existence TSST is now considering requests from commercial companies instead of research institutes or universities. It is still uncertain whether TSST will start supplying to these commercial companies (Fig. 8.3).

Fig. 8.3
figure 3

Value chain of TSST

Full size image

TSST does not have formal regulations regarding social responsibility. Moreover, they indicate that social responsibility is not a very salient or complicated item. The reason for this is that TSST operates in very controlled and trusted value chains:

We operate in the scientific world. Everybody knows everybody. (…) So there is a lot of social control.

That they trust their customers also stems from the fact that the machines are so very specifically built for research purposes:

You cannot do anything else with these machines than the research that they are specifically built for.

The implication here is that if nothing else can be done with it, also nothing ‘bad’ can be done with it. The trusting relationship with the other value chain actors is thus based on both the social relations and the specificity of the machine.

For TSST, their responsibility is to deliver sound machines to customers who they trust. This makes their value chain very stable. They do not think their responsibility extends to their customers where the ‘actual’ nanotechnological work is conducted. This could change however if they decided to start supplying for commercial customers.

The third company we studied is MyLife Technologies BV. At the time of the empirical investigation (Spring/Summer 2011) MyLife Technologies was a company in the making; it had not yet been registered at the Dutch Chamber of Commerce, but was still a university research group with the wish to commercialize its research. In February 2012, MyLife Technologies succeeded in becoming a registered company. The empirical results presented here concern the time when MyLife Technologies was not yet a formal company.

MyLife Technologies has developed, and is still developing, microneedle arrays (MNA). These are needles with micrometer dimensions, over 50 times shorter than a classical syringe. Since they only penetrate the outer skin but do not reach the sensitive nerves which lie below, this makes the application painless. The small volume of the needle is compensated by placing multiple microneedles in an array. This array is then integrated in a patch (MyLifeTechnologies.nl 2013).

The patches are easier to handle than classical syringes. This and the painless application could make the patches good candidates for vaccination of children. Another possible application is the combination of the patches with Lab-On-A-Chip technologies to create easy ways to self-test certain levels in the blood. Furthermore, the technology is developed further to see if there are possibilities for ‘intelligent patches’ which could, for example, contain more also newly developed ‘nanomedicine’. This would make the patches a totally new way of drug delivery combined with specifically designed new drugs for this way of delivery, instead of just creating a new way of delivering existing drugs.

This is still a very young company and not many value chain linkages have been made. While ideas about applications and products circulate, the chain is still very speculative. Some linkages have been made in research collaborations and also MyLife Technologies is part of a project from STW. Through this project a vaccination program has showed interest, but no concrete steps have been made yet. Not only is the value chain speculative, but also the final form of the technology will depend a lot on which customers MyLife Technologies is able to find (Fig. 8.4).

Fig. 8.4
figure 4

Value chain of MyLife Technologies

Full size image

MyLife Technologies has no formal forms of CSR, which is not surprising since the company does not even formally exist yet. The speculative nature of the future of MyLife Technologies renders its social responsibility speculative as well:

Corporate social responsibility will come when we really form a company.

However, notions of a certain responsibility do play a role.

The responsibility for a new technology lies with the people who initiate the idea. But if you believe that this is a technology that could help people, I think you also have a certain responsibility when you don’t do it.

For MyLife Technologies it matters a lot that they are in the field of nanotechnology. Their chances of commercialising their product could be seriously limited if the public opinion on nanotechnology were negative. This is also the reason why they want to try to pursue the option of using the microneedle arrays for vaccination:

Vaccination is something established. It is initiated from the government and it is socially accepted. This would be a good way to let people come into contact with our MNA patches.

MyLife Technologies clearly deals with a lot of speculation. Both their technology and value chain have not found a stable form yet. Furthermore, the final form of the value chain and technology are also interdependent. They are, however, very responsive to the fact that they are dealing with nanotechnology and are already considering some implications for responsibility issues beforehand. This could prove useful in developing further CSR measures when the technology and value chain stabilise.

5 Responsible Speculation

This chapter intends to investigate how to deal with responsibilities in the case of new technologies. In the last decade, the tradition of corporate social responsibility (CSR) of companies has been elaborated. In recent years this perspective on CSR has been extended with considering the responsibility of the value chain, which resulted in the notion of value chain responsibility (VCR).

We discussed how the CSR and VCR literature mainly addresses existing technologies and stable value chains. While these approaches sometimes are extended to possible new value chains, they largely ignore the issue of how firms (should) handle their social responsibility in the light of emerging technologies and the speculative value chains that accompany them.

In our study we explored these new areas of investigation. Figure 8.5 shows how the cases in this study can be positioned amongst the axes of existing versus emerging technology and the stable versus speculative value chain. We think that our empirical cases show that the expansion of the current CSR and VCR literature is sensible.

Fig. 8.5
figure 5

New value chains and new technologies

Full size image

Philips is currently engaged in a new technology with their Magnotech project, but it is clear that they are also still set in stable value chains with existing technologies. Also for the new technology, the value chain is clear and stable. This stability – based on previous products – resonates in their approach to CSR. Both CSR and VCR are filled in formal and controlled fashions. Because of the stability of their social responsibility approach, not much changes when they deal with a nanotechnology product. Philips relies on their CSR framework and on the REACH regulations.

Even though TSST is young company, their value chain is relatively stable. They do not have the power to have the controlled and very stable value chain of Philips, but their stability comes from the trusting relations with the actors. As a university spin-off, TSST remained within the social network of the academic world, where they know and trust their customers. They produce a new technology, but since the purpose of this technology is clear and limited, this also does not bring about much speculation. The newness of the technology does not have much impact on responsibility issues here, since the value chain is quite stable.

MyLife Technologies is clearly in the top right corner of the spectrum in Fig. 8.5. Both the technology is very new and the value chain is still highly speculative. Furthermore, the final form of the technology and the value chain depend on each other. Because of this uncertainty, also the responsibility issues are vague and unspecified. On the one hand, MyLife Technologies sees itself as unable to consider its social responsibility until the value chain becomes more stable and until what this means for their responsibility can be evaluated. On the other hand, dealing with an emerging technology such as nanotechnology, means that MyLife Technologies carefully considers public opinion and hopes to influence it. Their wish to link their technology with the vaccination program can be seen as an attempt to both stabilise the technology and the value chain speculation.

So it seems that when companies deal with both new technologies and new value chains, this can lead to changes in their view on social responsibility. When dealing with only a new technology, but in a stable value chain, the company can still rely on this stability of the value chain and not much change in social responsibility is deemed necessary.

This leads to interesting questions for further research into value chain responsibility. Within highly speculative value chains, also the considerations about the responsibility within that chain can only remain speculative. But when is the moment that the chain stabilises enough to consider the company’s and chain’s responsibility? And how does this relate to the responsibility that other value chain actors take and the mutual expectations in this value chain?

Something else to consider is that while CSR and VCR approaches can be enriched by adding notions of emerging technologies and speculative value chains, these approaches, in their turn, can enrich the debate on emerging technologies. Since nanotechnology is expected to be a disruptive technology – and because of the possible health and environmental risks – increasingly more ethical and social science research is directed to the ‘responsible embedding’ of nanotechnological applications in society. This research focuses mainly on either theoretical ethical considerations or responsible practices of nanotechnology researchers, since in most cases nanotechnology research has not yet reached commercial applications yet (See e.g. McGinn 2008; Roache 2008).

These studies address questions like whether we, as a society, would or should want new technologies, which could potentially be harmful for humans and the environment. Also unintended consequences could result from releasing artificially produced nanoparticles into the air, soil or water systems. While these are legitimate questions and considerations, they do not give any clear instructions for firms wanting to handle these technologies responsibly.

The cases in this research however, show that when applications do move from university research to commercial applications in companies, a more practical form of the responsible handling of nanotechnology is needed. CSR practices and guidelines could perhaps function as examples for the ethical work to become more ‘action-guided’ and move out of the theoretical realm. This could consequently lead to adding these ethical considerations to CSR guidelines, to embed them better in ethical considerations.

The empirical results from this study thus show that the CSR and VCR literature could be enriched by including cases of new technologies and speculative value chains. On the other hand, it seems that studies of ethical, legal and social aspects (ELSA) of new (nano)technologies could benefit from commercially embedded approaches of CSR initiatives. Both strands of thinking could prove valuable for firms currently dealing with the demand to be both socially responsible and innovative.