A Dynamic Capabilities Perspective

Topics: Sociology, Corporate social responsibility, Strategic management Pages: 9 (5842 words) Published: March 7, 2015
Corporate Social Responsibility and Environmental Management Corp. Soc. Responsib. Environ. Mgmt. 18, 285–293 (2011)
Published online 6 October 2010 in Wiley Online Library
(wileyonlinelibrary.com) DOI: 10.1002/csr.251

Strategic Corporate Social Responsibility:
A ‘Dynamic Capabilities’ Perspective
Venugopal Ramachandran*
Insitute for Financial Management and Research, Chennai, India

ABSTRACT
In this paper, strategic corporate social responsibility (CSR) is defined on the basis of Porter’s theory of competitive advantage. Two kinds of dynamic capabilities are proposed as the precursors to strategic CSR success and operationalized in terms of two sets of associated processes. The effectiveness of these processes is postulated to be dependent on their attributes and the human and social capital employed in them. Implications for practitioners and researchers are outlined. Copyright © 2010 John Wiley & Sons, Ltd and ERP Environment.

Received 14 March 2010; revised 22 August 2010; accepted 31 August 2010 Keywords: strategic CSR; dynamic capabilities; environment management capability; impact assessment processes

Introduction

B

USINESS ORGANIZATIONS ARE UNDER INCREASING PRESSURE TO PARTICIPATE IN SOLVING SOCIAL PROBLEMS. The range of problems that they are expected to engage in is quite wide; indeed, according to one author, ‘virtually nothing that society at large would like to achieve is beyond the scope of business ethics’ (Wilcke, 2004, p.197). Given this pressure and the fact that corporate social responsibility (CSR) entails costs, business organizations are faced with the contradictory situation of having to engage in social problems on the one hand and maintaining profits on the other. Finding ways in which social goals can be pursued in ways that would not adversely affect profits is therefore an issue of concern to managers and management researchers. Against this backdrop, a growing stream of practitioner-oriented literature describes a variety of CSR – termed strategic philanthropy or strategic CSR – that could not only confer economic returns on a firm and thus off-set the cost of CSR, but also lead to competitive advantage (Porter and Kramer, 2002; 2006; Falck and Heblich, 2007; Sasse and Trehan, 2007; Heslin and Ochoa, 2008). As far as the academic literature is concerned, there have been a few contributions that have sought to model strategic CSR. There is, however, scope for a more theoretically rigorous definition of the ‘strategic CSR’ construct and an identification of firm-specific precursors to ‘strategic CSR’ success. This paper aims to contribute in this direction. In the succeeding section, we elaborate on a behavioral definition of strategic CSR that is rooted in the positioning school of thought in strategy – more specifically in Porter’s (1980; 1985) theory of competitive advantage. In the next section, we turn to the precursors of strategic CSR success. We draw from the literature on the resource-based view of the firm and dynamic capabilities to identify two kinds of dynamic capabilities as the necessary precursors to successful strategic CSR. We also point to how these capabilities can be operationalized in

*Correspondence to: Venugopal Ramachandran, Institute for Financial Management and Research, 24 Kothari Road, Nungambakkam, Chennai, Tamil Nada, India 600034. E-mail: venugr@ifmr.ac.in
Copyright © 2010 John Wiley & Sons, Ltd and ERP Environment

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V. Ramachandran

terms of two sets of associated processes. We conclude with a discussion of the research and managerial implications.

What is Strategic CSR?
The academic literature on CSR has highlighted the lack of consensus and the prevailing confusion in defining CSR (Baron, 2007; Margolis and Walsh, 2003; McWilliams et al., 2006; Mackay et al., 2007). Elsewhere in the literature it has also been pointed out that the lack of a single, universally accepted definition of CSR may not be very problematic, since, despite...

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