Acting as a benefit corporation and a B Corp to responsibly pursue private and public benefits. The case of Paradisi Srl (Italy) – International Journal of Corporate Social Responsibility

This section describes the experience of Paradisi Srl, an Italian B Corporation with the aim to evaluate the motivations for and benefits of becoming a B Corporation, as well as to the process pursued to acquire this form. Italy is one of the countries that has the highest concentration of B Corp and BC (Nigri & Del Baldo, 2018). About 130 companies were included in the list available on the BCs website in 2017 and 210 were inserted included in the online register of BC as per July 2018.

For the purpose of this study we decided to adopt a qualitative-based approach based on a case-study (Eisenhardt & Graebner, 2007; Flick, 2009; Grafton, Lillis, & Mahama, 2011; Yin, 2009) useful for the in-depth analysis of an emerging and complex phenomenon. Explorative case studies can be considered an appropriate research strategy because it provides richer insights that facilitate the understanding of the different aspects observed while still attempting to produce some form of generalisation (George & Bennett, 2005; Gerring, 2006).

Information was collected using multiple sources: the company website and the Italian BCorp website,Footnote 7 the company’s reports (Paradisi integrating report and B Impact report, year 2016) and in-depth interviews and informal conversations performed throughout a multiyear period (2013–2017) with the B Corp director and Impact Manager (the President of the company). The President (S. Paradisi) is responsible for entrusting specific functions and tasks for the pursuit of social purposes. In total we carried out three interviews lasting about one hour each. Closed and open questions were also asked during several direct correspondences (i.e. meetings, multi-stakeholder forums, workshops and round tables involving entrepreneurs, managers and representatives from not-for-profit organizations) aimed to discuss and promote CSR actions and projects in the Region (the Marche, Central Italy) in order to achieve a holistic understanding of the interviewee’s point of view (Patton, 1987) on the motivations, perceptions and benefits of becoming a BC. In particular, the questions addressing “the way and the how” were tied to four main themes: the values behind the CSR and sustainability orientation affecting the attitudes, behaviors and perceptions of the entrepreneur; the journey lead by the entrepreneur/manager towards CSR and sustainability before and after the choice to transform the company in Società Benefit and getting involved in the BC movement; the motivations (internal and external determinants) which led the company to seek the certification and the change to the legal status; and the effects (in terms of organizational and external impacts) and the benefits derived from the change. Some quotations from the interviews are used to illustrate and provide concrete examples of the underlying concepts and relationships in the manner advocated by Siggelkow, 2007.

The information collected from the interviews and the documental analysis was analyzed qualitatively through iterative manual coding into the four themes formalized by the research objective (Gioia, Corley, & Hamilton, 2013; Huberman & Miles, 1994). This approach is well suited for in-depth single case studies (Bergh, 2011). As afore mentioned the information gathered using interviews with the entrepreneur in charge of B Lab’s certification process was supplemented by sources of secondary information which provide more accurate and unbiased information to contextualize interview findings. The news was gathered using documentary materials both internal (e.g., presentations and reports) and external (e.g., websites and press releases). Documentary evidence is considered objective because it is generated outside the influence of the researcher (Patton, 1990).

Paradisi’s profile

The company was founded in 1957 by Antonio Paradisi and a partner based in Jesi (Ancona). In 1985, the founder’s children, Sandro and Tiziana, constituted the current Paradisi Srl, devoted to manufacturing precision turned components (metalworker sector) for the automotive, electromechanical and automation sectors. Throughout the years, the company has expanded into new markets thanks to the development of automatic turning and the quality of its operations. Paradisi Srl works in symbiosis with both the needs of its customers and workers. Since its foundation the company has been characterised for its attention to a pleasing work environment in term of safety, stimulation and motivation. Secondly, Paradisi is deeply rooted in the local area where it is headquartered. “We are proud not only to be an Italian company, but one that was founded and ‘brought up’ in the Marche region and that helps to make the area around it a better place”. In order to remain a leader, as well as generate wealth for its stakeholders, the company has to be regarded as a “resource for the territory”Footnote 8.

Moreover, the company is actively involved in managing operations to safeguard the environment. For instance, it systematically promotes separate waste collection for recovery and recycling and monitors energy efficiency levels, as well as environmental performance levels.

“We are convinced that we can only excel and be competitive if the territory around us is equally competitive. We have always worked to improve it both from a social and environmental point of view. Certification is the tool that helps us formalize the direction we are going in and gives us increasingly challenging improvement goals, thanks also to the need to compare ourselves with other B Corp situations” (S. Paradisi, President).

In 2016 the company, which currently employs 39 people, achieved important economic and financial performance: over 7 million euros in revenues; about 3 million euros in investments and a profit of 400.000 euros. However, it has not finished improving and these numbers are not a sign of success, as the President explains: “Let’s start with our financial performance: a 13% increase in turnover and 134% in net profit. However, not only the numbers and economic data have given us gratification. On September 27, 2016, we decided to transform the company into Benefit” (Italian Law No 208 December 28, 2015, art. 1, subsections 376–382). Throughout the years Paradisi has started to change the “paradigm” and share a new business culture: from an entity that exploits resources (and often creates pollution) in order to maximize its own profits, to an entity that distributes wealth, while minimizing the environmental impact. Such a change relies on transparent and fiduciary relations with all stakeholders involved in the value creation process and the territory that the company belongs to.

As the Statute of Paradisi Srl states (Social Object, Art. 3) it is managed in a way that balances the interest of the members, the pursuit of common benefit and the interests indicated in the corporate purpose. The economic results that Paradisi has achieved in the last few years testify that there is a two-way relationship between profit and general public benefit (common benefit) (Fig. 2).

“We are increasingly convinced that positive economic performance is closely related to the transparent and sustainable way our company operates daily, tending to balance the interest of shareholders with that of all stakeholders, thus allowing us to continuously seek the dynamic balance of value creation, widespread for our territory” (S. Paradisi, President; Paradisi Integrated Reporting 2017: 7).

Fig. 2

Paradisi dynamic balance between economic, environmental and societal value

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The trigger agent of a “hidden” hybrid purpose form orientation

Paradisi Srl has been able to maintain its “dynamic balance” in the years after merging tradition and innovation, economic-financial aspects and social aspects, short-period and long-term orientation and flexibility in production and investments. This capability that marks since the foundation its pro-social orientation (i.e. the status of for profit social enterprise) is connected to the values of the founder, which were then inherited by his children: the momentum towards the ideal, the punctuality of knowledge, and competence and the value of hard work. Such values have been further reinforced by Sandro Paradisi (the current President), who, since he was a child, has always been fascinated by the perfection of the helical shape of a shell, which is still the symbol of the company. Such orientation has been summarized in the company’s mission:

“In fact that shell has become the symbol of my adult work: to use natural materials and skillfully transform them to draw up everyday objects; to interpret traditions in a new and versatile way; to search for precise and ambitious details with elegant style and meticulous care” (S. Paradisi, Paradisi; Paradisi Integrated Reporting 2017: 35).

The shell can also be intended as a metaphor of the company evolution toward the pursuing of further goals, starting from “private” and traditionally profit maximization goals to specific and general public benefits.

The company values (Table 2) have been translated into the company vision, that is “the search for a dynamic balance”. The latter is intended as a long-term and sustainable growth capable to ensure the mutual development of the organization and the socio-economic context where Paradisi Srl was founded and currently acts. The values system that characterises the identity of the company (Paradisi Srl, 2017; Paradisi Integrated Reporting, 2017: 33–34) orients all actions and strategies and is shared by the management team and the employees, both at the individual and organizational level. Therefore it constitutes the “substratum” of the “mixed” and ideal/purpose-driven orientation and the key driver of the shift toward the formal recognition as benefit corporation. Namely, since its set up Paradisi Srl was oriented to a multidimensional (economic, social and environmental) growth, despite the lack of a formalized strategy and the absence of formal roles, processes (e.g. a CSR officer) and tools useful to disclose such orientation (i.e. a social balance, sustainability report). In other words, it represents a case of an “originally (or native)-born” hybrid organization that only recently has been formally recognized as benefit corporation, after the enactment of the Italian law, even if de facto it has always been pursuing such a “mixed” orientation.

Table 2 Paradisi’s founding values

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Accordingly, the corporate governance guarantees the balance of specific purposes of common benefit and profit with the vision of continuous improvement. Sandro and his sister Tiziana have equal shares in Paradisi Srl. The administration is entrusted to a Board of Directors composed of three members: S. Paradisi and T. Paradisi (who are respectively the Chairman of the Board of Directors and the Chief Executive Officer) and an external and independent administrator who, in turn, plays the role of President and General Manager of an SME in a close town in the same region (Del Baldo, 2010). The board members (both internal and external to the owner family) belong to the same local community and share a set of cultural and social values that favour the development of the organization as an ongoing concern. They represent the primary interested constituents in the general and specific benefit to pursue.

Paradisi’s BC certification: the annual benefit report – the report on the common benefit

In September 2016, Paradisi turned into a Benefit company (Paradisi Srl Società Benefit). In December 2016 it obtained the B Corporation certification from B Lab on the basis of the expected standards for social and environmental benefits, responsibility and transparency. The company has been externally evaluated on its impact on employees, the community, the environment and its customers. “Paradisi is proud to participate in the dissemination of this new business paradigm, hoping that in the future every business will use its own activities as a tool to contribute to the common good, because solidarity is a good business!” (S. Paradisi, President).

With the aim to disclose the responsible business practices in 2015 the company released the first integrating report and implemented the analysis of the added value, aimed at demonstrating how the value generated by the company had been distributed among the several stakeholders, included the local community and the territory it belongs to, addressing the achievement of specific and general public benefits. Italian Law on BCs requires Benefit companies to annually release “a report concerning the achievement of the common benefit” to be attached to the annual report. The evaluation of the impact generated must be made by adopting an external evaluation standard. Paradisi Srl chose to adopt the GRI – G4 standard (GRI 2013) and release an integrating report that includes the analysis of all the evaluation areas proposed by the legislation: the company governance,Footnote 9 workers, other stakeholders and environment. It also indicates the following features for each area (as required by the Law No 208/2015, Art. paragraph 382): description of the general and specific objectives; actions taken to achieve them; further activities carried out; impediments; impact assessment and the objectives for the following year (Paradisi Integrated Reporting 2017, p. 95 and following).The annual benefit report (titled integrated reporting year 2016) includes “the manifesto of being a Benefit Corporation” which clearly states the company’s orientation towards the continuous improvement and sustainable development of the territory. “As a Benefit company, the company intends to pursue, in addition to profit, the purpose of common benefit and operations in a responsible, sustainable and transparent way with people, communities, territories, the environment, cultural and social organizations, associations and other stakeholders. Paradisi is highly committed to diffusing a responsible and sustainable business culture in order to achieve the economic and social growth of the territory and the community” (Paradisi Integrated Reporting 2017: 21–22).

The specific purposes of common benefit are relative to: care and motivation of personnel with recognition of prizes and training; use of renewable energies; promotion of training on sustainability issues, partnering with schools, universities and public institutions; promotion of technical training, also partnering with public and private schools, and universities; investments in technological innovation; support to local entrepreneurship; selection of local suppliers that respect sustainability principles.

“The spread of a responsible, sustainable and transparent business culture can also take place in collaboration with public and private companies, professionals, organizations and institutions through meetings, workshop, laboratories and public events” (S. Paradisi, shareholders meeting, September 27, 2016).

In this regard the annual benefit report explains the objectives pursued, the evaluation of the impact generated (Evaluation of the Impact generated and goals for 2017) and a section dedicated to the description of the objectives that the company intends to pursue in the following year. In addition, the company released an Environmental DeclarationFootnote 10 which testifies Paradisi’s 100% Green Energy, an important turning point for environmental sustainability, since the company exclusively uses energy produced by renewable resources.

Among the aspects related to the aforementioned areas in the following we provide a brief example focusing attention on workers, external stakeholders and the local community (territory).

First, Paradisi’s strategy is based on the professional and human flourishing of the key actors (employees and collaborators), who are fundamental for the achievement of the company’s performance. In the last few years a significant increase has been recorded in the hours dedicated to training courses (1000 h training in 2015 and 1700 h in 2016) with about an average of 45 h/year per employee. The company invests in the professional skills of the whole staff through specific plans ranging from training basic technique for toolmakers and operators to new technologies, from workplace safety to environmental sustainability. In this regard good practices aimed to support the reduction of pollution are encouraged and promoted. For instance, in 2016, the company contributed to the European Mobility Week, whose purpose was to monitor the use of ecological means of transport such as cycling to go to work.

Second, particular attention has been addressed to the training and career opportunities of female personnel in departments that are historically “male-dominated”. Concrete support for families and work-life balance has been granted through adhering to the Nursery School “Industria Consortium Vallesina”, of which Paradisi is a founding member, which allows working mothers/fathers’ children to attend the infant school under the payment of a fee whose amount is lower than the market prices.

Third, in addition to the great attention devoted to safety working condition (testified by a low number of accidents) specific incentives (on the basis of indicators such as productivity, individual absenteeism and return on sales rate) are given to employees every year. In this regard, among the improvements and future objectives there is the adoption of the code of conduct.

Fourth, Paradisi’s choice of suppliers aims to support local entrepreneurship and is based on the search for local partners that share high standards in terms of quality, sustainable growth and technological development.

Finally, concerning the dialogue with the territory, in compliance with the current Italian legislation, Paradisi has established a relationship based on maximum correctness and transparency with the Public Administration and local community, organizing events aimed at sharing the “Paradisi’s journey” towards the development of the community and the territory. Some examples of the several projects that were implemented throughout the year are summarized in the following table (Table 3).

Table 3 Paradisi’s initiatives for the general public benefit

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The formal acknowledgment and assessment of the “shift”: Paradisi B impact report (2016)

The first B Impact report (Table 4) released by Paradisi SrlFootnote 11 points out an overall score attributed equal to 85 over a median score relative to all businesses that have completed the B Impact Assessment equal to 55. As afore mentioned, businesses are eligible for a certification as a BC and enter the status of B-Corp if they obtain a score higher than 80 (on a score ranging from 0 to 200). The report is organized into five sections briefly summarized below.

Table 4 Paradisi B Impact report (2016)

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Environment

The Environment section evaluates a company’s environmental performance through its facilities, materials, resource, and energy use and emissions. Where applicable, it also considers a company’s transportation/distribution channels and environmental impact of its supply chain. In addition, this section measures whether a company’s products or services are designed to solve an environmental issue (i.e. products that support the provision of renewable energy, conserve resources, reduce waste, promote land/wildlife conservation, prevent pollution) or contribute (through education, measure or consult) to solve environmental problems.

Workers

The Workers section assesses the company’s relationship with its employees and collaborators, focusing on how the company treats its workers (through compensation, benefits, training and ownership opportunities) and on the overall work environment (through management/worker communication, job flexibility and corporate culture, and worker health and safety practices).

Customers

The Customers section of the assessment focuses on whether a company sells products or services that promote public benefit, and if those products/services are targeted towards serving underserved populations. Attention is addressed to measure whether a company’s product/service is designed to solve a social or environmental issue (i.e. improves health, promote the arts or sciences, preserves environment, creates economic opportunity to individuals or communities, or acts as a driver to increase the flow of capital to purpose-driven enterprises).

Community

The Community section evaluates a company’s supplier relations, diversity, and involvement in the local community. It also measures the company’s practices and policies around community service and charitable giving, including assessing whether the company’s product/service is designed to solve a social issue (i.e. access to basic services, health, education, economic opportunity, and arts) and increase the flow of capital to purpose-driven enterprises.

Governance

The Governance section evaluates a company’s accountability and transparency and focuses on the company’s mission, stakeholder engagement and overall transparency of the company’s practices and policies (Paradisi B Impact Report 2016: 2). In other words, it evaluates if and how the company is accountable for/towards different expectations by several stakeholders.