How media influence South African agri-businesses’ CSR-programs : can CSR create incentives for agri-businesses to include small-scale farmers in their supply chain, despite high transaction costs?

Abstract: In UNDP (2008) the UN Commission on the Private Sector and Development stresses the importance to develop the private sector within the African agricultural sector as a mean in succeeding to reach the Millenium Development Goals. Since the 90s the number of larger agri-businesses in Sub-Saharan Africa has increased. When an agribusiness establishes in a developing area, it can be mutually beneficial both for the profit of the company and for the economy of the developing area. However, it can also pose a threat to local small-scale farmers since, as Vorley et al. (2009) points out, for an agribusiness to collaborate with small-scale farmers in comparison with large-scale farmers, involve larger transaction costs. Hall (2012) mentions that there is an increased presence of both South African agribusinesses and large-scale farmers elsewhere in Africa. Consequently, South African agribusinesses choice to either collaborate with small-scale farmers or not, affects people across the continent. The present study considers that to include small-scale farmers in the value chain can be a corporate social responsibility (CSR) strategy for large South African agribusinesses. The strategy is a potential method for the agribusinesses to surpass the transaction costs of selecting to collaborate with small-scale farmers compared to large-scale farmers. Buhr & Grafström (2007) finds few previous studies that look at media’s influence in how firms’ managements develop CSR-programs. Yet Alvarez et al. (2005) reflects that newspapers, magazines, businesses’ websites and televised business programs are important sources of information for business managements. The aim of the present study is to specifically address what role South African media play in creating a social expectation on South African agribusinesses to include small-scale farmers in their values chain, as a part of their CSR program. If a relationship exists it indicates that stakeholders who want to empower small-scale farmers can use media to demand more CSR from agribusinesses, to increase the companies’ efforts to include small-scale farmers in their value chain. The theoretical framework of the study constitutes of economies of scale, transaction economics and product differentiation. The topic is approached by a quantitative media discourse analysis, studying the sustainability reporting of 19 different South African agribusinesses and 18 newspapers during the years 2008-2012, to see to what extent the topic of the exclusion or inclusion of small-scale farmers is reported in the documents. In order to establish a relationship, the result from the media collection is regressed on the result from the sustainability reporting. The data is regressed using first a panel data approach and then a time series analysis. The study establishes that a causal relationship exists, where media explains the change in sustainability reporting on the topic. However, the characteristic of the relationship, whether it is positive or negative, depends on the level and the time aspect. On an aggregate level and with an instantaneous time aspect, the relationship is found to be positive. Yet, on an individual business’ level, with a six to four months’ time lag, the relationship is found to be negativeThere are some additional findings from the study. South African companies that are subsidiaries of global companies are more likely to report on the CSR-topic. No such conclusion can be drawn that retailor are more likely to address the issue compared to other agribusiness, even though they have direct contact with the final consumer in the value chain. The year 2011 is found to have a negative impact on the CSR-reporting on the topic. Possible explanations can be that the ongoing food crises lead to a decrease in the demand for CSR-product, since CSR-products can be considered to be normal goods, meaning that the agribusinesses had little economic incentive to provide them.