Csr Strategy

Topics: Corporate social responsibility, Corporation, Strategic management Pages: 43 (13366 words) Published: June 20, 2013
Why Every Company Needs a CSR Strategy and How to Build It
Kash Rangan Lisa A. Chase Sohel Karim

Working Paper
12-088 April 5, 2012

Copyright © 2012 by Kash Rangan, Lisa A. Chase, and Sohel Karim Working papers are in draft form. This working paper is distributed for purposes of comment and discussion only. It may not be reproduced without permission of the copyright holder. Copies of working papers are available from the author.

Why Every Company Needs a CSR Strategy and How to Build It
The topic of corporate responsibility has been captioned under many names, including strategic philanthropy, corporate citizenship, social responsibility and other monikers. As the names imply, each carries with it a certain perspective on the role of business in society. Regardless of the label, for now the dominant paradigm underlying corporate social responsibility or CSR is centered on the idea of creating “shared value.” The role of business, according to this model, is to create value for its shareholders but in such a way that it also creates value for society, manifesting itself as a win-win proposition. In one fell swoop the idea aims to unite the critics of CSR from the left and the right, for the notion of CSR has had the dubious distinction of being criticized by both sides of the ideological spectrum. Civil society advocates question corporations’ fundamental motivations for CSR, asserting that corporate programs to fund social and environmental programs are nothing more than public relations campaigns to boost their brand reputations, often disproportionately to the effort itself. This dismissal of CSR resides in a fundamental distrust of a corporation’s legitimate intentions to do anything more than increase its profits. On the ideological right, critics reject the role of CSR in a capitalist society where the primary responsibility of business is seen as creating financial returns for its shareholders and the larger economy. A company’s value, according to these critics, resides entirely in its ability to generate financial wealth for its shareholders, and any social or environmental initiative that does not simultaneously create profit for a company is deemed to be a waste of corporate resources.1 This viewpoint is founded on stark delineations between the spheres of responsibility and influence of government, civil society and the business sector. According to this argument, if each sector did what it is supposed to do, a prosperous and just society would flourish with optimal allocation of resources.2 Further exacerbating attacks from the left and the right is the utter lack of metrics to evaluate the efficacy of CSR programs. For a sector driven and evaluated by its measurement of financial returns and investments, the lack of any agreed-upon measures to quantify the social or environmental return of money spent on CSR seems to run counter to corporate ethos.3 Against this contentious background the idea of creating shared value has found appeal. The heart of the concept rests on the ability of a company to create private value for itself, which in turn creates public value for society. And indeed there are examples of companies that have accomplished this goal. Cisco’s establishment of Cisco Academies to train networking personnel is often held up as an example of “shared value.” Nestle and its development of Milk Districts in China, India and Pakistan is another oft-cited example, and there are many more.4 In spite of its appeal, however, there is a fundamental problem with the shared value idea. The tension between business goals and social/environmental goals cannot be wished away with the hope of co-creating private and public value. By its very nature substantive public value creation requires investing corporate resources for a payoff that is both distant and uncertain. This makes shared value very much a top-down concept. Only the CEO or the executive committee will have the authority to conceive and...

References: 5
Global Reporting Initiative, “Sustainability Disclosure Database,” accessed February 20, 2012, http://database.globalreporting.org/.
6
The Economist, “Global Business Barometer” (Online survey conducted by the Economist Intelligence Unit, November-December 2007)
N. Craig Smith, Sean Ansett and Lior Erez, “How Gap, Inc. Engaged with Its Stakeholders” MIT Sloan Management Review (Summer 2011) Randle D. Raggio, “Case Study: When the CEO’s Personal Crusade Drives Decisions,” Harvard Business Review (June 2010).
N. Craig Smith, “Corporate Social Responsibility: Whether or How?” California Management Review (June 1, 2003), 45: 53-56. Milton Friedman, “The Social Responsibility of Business is to Increase its Profits,” New York Times, September 13, 1970.
Michael E. Porter and Mark R. Kramer, “The Competitive Advantage of Corporate Philanthropy,” Harvard Business Review (December 2002).
Nike, Inc., “Code of Conduct,” accessed July 13, 2011, http://www.nikebiz.com/responsibility/ documents/Nike_Code_of_Conduct.pdf. Simon Zadek, “The Path to Corporate Responsibility,” Harvard Business Review (December 2004).
Nike, Inc., “Nikebiz: Nike Responsibility: Considered Design,” accessed July 23, 2011, http://www.nikebiz.com/ responsibility/considered_design/considered_index.html. N. Craig Smith, Sean Ansett and Lior Erez, 52:69-72.
V. Kasturi Rangan and Regina Garcia-Cuellar, “Grupo Bimbo: Growth and Social Responsibility” (Harvard Business School case 9-509-025, February 23, 2009).
Xueming Luo & C.B. Bhattachary, “Corporate Social Responsibility, Customer Satisfaction, and Market Value” Journal of Marketing (October 2006). 70: 1-18.
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