The world business council for sustainable development in its publication “Making Good Business Sense” by Lord Holme and Richard Watts, defined that corporate social responsibility is the continuing commitment by business to behave properly and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large. Corporate social responsibility started in the early 1970s, the organization and the governments already focus on social responsibility. Due to the issue of economic and financial stress, society become weaker, thus the need of CSR increased. During the past, social responsibility was limited to philanthropy and charity giving, but the concept has been expanded to include employment practices, fair operating practices, consumer protection, community development and environmental sustainability. In year 2006, Michael had come out a new model, he argues that CSR should be strategically integrated within an organization’s value chain. Michael Porter and Mark Kramer propose a model to look at the relationship between business and society that does not treat corporate growth and social health as a zero-sum game. They introduce a framework that companies can use to identify all of the effects on society and determine which ones to address and suggest effective ways. In order to gain competitive advantages, Porter suggested that going through the chain of organization activities will add more value to the product and services than the sum of added cost of these activities. After the research, I had find out that CSR should integrated within an organization’s value chain in order to engender sustainable market competitive advantage, however that have some critics have argued Porter’s framework.
Porter and others (Stewart, 2006; Windsor, 2006) argue that CSR requires a major focus by using a strategic analytic approach rather than reaction to outside pressures or good goals. Porter proposed value chain in year 1985 to plot corporate strategy, value chain can identify the positive or negative social consequences of all a firm’s activities. Also, social influences on the firm’s competitiveness can be identified through the classic diamond framework. Having identified social issues, they make a bold claim: “The essential test that should guide CSR is not whether a cause is worthy but whether it presents an opportunity to create shared value—that is, a meaningful benefit for society that is also valuable to the business” (Porter and Kramer, 2006). As a result, they show how a company can create a corporate social agenda, composed of “responsive CSR” and “strategic CSR.” Responsive CSR has two elements: acting as a good corporate citizen and mitigating adverse or anticipated adverse effects from the business activity, essentially from company operations. Responsive CSR is inherently limited, however, because it remains incidental to the company’s business. Strategic CSR aims at achieving large and distinctive social and business benefits from a strategically focused set of initiatives (Carlisle and Faulkner, 2004; Crawford and Scarletta, 2005).Example of strategic CSR approach given is Toyota’s Prius, the hybrid electric/gasoline vehicle, has achieved environmental and competitive benefits by cutting gas consumption in half and pollutants by about 90%, while establishing the world standard in this technology. McDonald’s, well known for its support of hardworking franchisees, they have also established its educational partnership with degree-granting institutions, offering tuition compensation and very high levels of internal promotion within its ranks, in addition to its waste reduction initiatives. Whole Foods has built an entire corporate value chain around its commitment to natural, organic products and environmentally friendly operating practices. In the article, Porter and Kramer argued that strategic CSR can be easily...
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