How does CSR affect competitive advantage
Introduction
For many decades, corporate social responsibility (CSR) has been viewed as a waste of resources – money, labor, time, etc. – which conflicts with the firm’s responsibility to make profits in order to compensate its shareholders (Friedman, 1970; Henderson, 2001; Jensen, 2002; Levitt, 1958; Sundaram & Inkpen, 2004). On the contrary, especially during the last years, many supporters of CSR came up with the argument that CSR provides a company with a series of specific benefits that very often will outweigh the expenditures. Some are even of the opinion that CSR is necessary for business, both from an economic and a social point of view (Brown & Fraser, 2006; Drucker, 1984; Kotler & Lee, 2005; Mintzberg, 1983; Porter & Kramer, 2006). Schreck (2011) concludes by writing that the following two related conflicts could be solved by proving that CSR and profit-maximizing interests can go hand in hand: On the one hand, the argument that CSR is just a waste of resources would be invalidated and on the other hand, CSR expenses could be justified to the shareholders as compatible with the firm’s obligations and, thus, legitimate and economically beneficial.
Although a great amount of literature is being published about the connection of CSR and the financial performance of firms, it still lacks empirical support and is therefore vulnerable to the criticism that this relation is not a grounded fact, but rather wishful thinking by its proponents (Orlitzky, Schmidt & Rynes, 2003; Schreck, 2011). Therefore, this article aims at throwing light on the link between CSR and firm performance by assessing how CSR might influence a firm’s competitive advantage. Specifically, as many companies realize how important it is to attract highly skilled employees as a main component of their competitive advantage (Pfeffer, 1994; Teece, 1998; Turban & Greening, 1997), the focus will be on the link between CSR and human resources.
This article will start with a review of previous
For many decades, corporate social responsibility (CSR) has been viewed as a waste of resources – money, labor, time, etc. – which conflicts with the firm’s responsibility to make profits in order to compensate its shareholders (Friedman, 1970; Henderson, 2001; Jensen, 2002; Levitt, 1958; Sundaram & Inkpen, 2004). On the contrary, especially during the last years, many supporters of CSR came up with the argument that CSR provides a company with a series of specific benefits that very often will outweigh the expenditures. Some are even of the opinion that CSR is necessary for business, both from an economic and a social point of view (Brown & Fraser, 2006; Drucker, 1984; Kotler & Lee, 2005; Mintzberg, 1983; Porter & Kramer, 2006). Schreck (2011) concludes by writing that the following two related conflicts could be solved by proving that CSR and profit-maximizing interests can go hand in hand: On the one hand, the argument that CSR is just a waste of resources would be invalidated and on the other hand, CSR expenses could be justified to the shareholders as compatible with the firm’s obligations and, thus, legitimate and economically beneficial.
Although a great amount of literature is being published about the connection of CSR and the financial performance of firms, it still lacks empirical support and is therefore vulnerable to the criticism that this relation is not a grounded fact, but rather wishful thinking by its proponents (Orlitzky, Schmidt & Rynes, 2003; Schreck, 2011). Therefore, this article aims at throwing light on the link between CSR and firm performance by assessing how CSR might influence a firm’s competitive advantage. Specifically, as many companies realize how important it is to attract highly skilled employees as a main component of their competitive advantage (Pfeffer, 1994; Teece, 1998; Turban & Greening, 1997), the focus will be on the link between CSR and human resources.
This article will start with a review of previous