CSR does not have to be Strategic

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CSR does not have to be Strategic
Ismael Bena - MBA, SIG Leader
As has recently been argued by Rangan et al. (2015), CSR should not be designed to deliver business results. In contrast, companies should align their social and environmental activities with their business purpose and values. They go on arguing that business performance improvements should merely be the result of “spillover” and not the reason for being a responsible corporation.
This is a stark contrast with the shared value principles, which are predominantly grounded on improving a companies’ performance through CSR/CSV (Porter & Kramer, 1999; 2002).

Studies have indicated that well operating companies are less interested to integrate CSR in their corporate strategies and opt for self-standing initiatives. A challenge with this approach is the misalignment of well-intended initiatives, hence creating non-coherence across business units and demographics, which in turn results into wasted capital.

It has therefore become more recommendable to align CSR activities, which Rangan, et al. (2015) classify in three 'theaters of activities’: (1. Philanthropy, 2. Improving operational effectiveness and 3. Business model transformation) to create consistency with the company’s purpose which correlates with the social importance of the company. In doing so, these activities are to be directly managed and overlooked by a C-suite executive, in combination with business unit managers to guarantee a coherent CSR vision.

Misalignment in CSR initiatives across business units will result in a waste for the company and does not contribute to its overall vision. Coordinated social initiatives, which are in line with the company’s purpose, will positively affect the company across stakeholders groups as spillover even if that was not necessarily its objective.

Sources: Rangan, K. Chase, L. and Karim, S. (2015), 'The Truth about CSR - Most of these Programs aren’t Strategic—and that’s OK’, Harvard Business Review 2015, Jan-Feb.
Porter, M.E. and. Kramer, M.R (1999) ‘Philanthropy's New Agenda: Creating Value’, Harvard Business Review. 77, pp.121-131.

What Constitutes Business Results?
Love Lonnroth, Member
To link CSR to business performance is difficult, which is why it is also hard to align CSR with corporate strategy. I think one of the main underlying causes is that corporations are so focused on driving short term financial performance that they only define actions that drive short term performance as of strategic importance.
But the main business reason for "doing CSR" is to build brand reputation and to attract talent. These things do not show up on the profit and loss statement, but they do effect long term value creation.
There are also some cases where CSR is a driver of business model transformation, but these are quite rare. Hence, to define what is strategic for a corporation, it is essential to define what we mean by performance and what the time frame is.

Strategic Corporate Social Responsibility not Corporate Social Philanthropy
Emezi Charles, Member
CSR is an ideology aiming at persevering the organization’s profitably in the long run, without compromising the organization ability to address her short run goals.
Strategic CSR requires a clear definition of what are the organizational CSR objectives and the integration of this objectives in the corporate objectives. Strategic CSR is sometime viewed as a quick PR for the organization this is why some firms pay no thought to its strategic place (they just want the PR). Strategic CSR establishes a fit between the organization’s objectives and the societal demand. Strategic CSR makes sure that the business is not just giving away their limited resources in social philanthropy, but is investing into their corporate long term objective(s).
CSR that does not considers the business objective is not profitable for the business in both short and long run. CSR should be strategic to address the stakeholders needs.

Long Term Benefits of CSR
Pornpunsa Wuttisanwattana, Member
CSR is originally designed for the organization to be responsible for social issues and give something back to society. The only linkage to the business result is that the team and people that are undertaking the CSR activity together will develop better relations, which will lead to better communication and coordination. The employees will have a higher possibility to be proud of their own organization.
However, the activity could lead to some negative results too, such as if they see someone in their team taking advantage from others in the CSR project, the team leader needs to take care of that.

When CSR is Strategic Depends on the Corporate Purpose
Jaap de Jonge, Editor
In my view, by definition, a CSR initiative is to be considered 'strategic' (very important) if it is aligned with the overall corporate purpose of the particular corporation at hand. This means that the answer to the question "when CSR is to be considered strategic?" depends on what is the corporate purpose of that corporation:
- If its corporate purpose is MAXIMIZING LONG-TERM SHAREHOLDER VALUE, then we must judge any CSR initiative by considering if and how the CSR activity supports that purpose. This is more or less the thinking behind Porter’s Shared Value concept. Note that this does NOT mean that CSR activities can never be strategic for such companies, it just means that we must judge them by that limited long-term financial goal. CSR is then a means to an end, but not an end in itself. See our strategic/instrumental stakeholder knowledge center for more info.
- If the corporate purpose is LONG-TERM STAKEHOLDER VALUE, then the extent to which any CSR initiative should be considered strategic for the corporation depends on what categories we include in the 'stakeholders'. Do we only include the employees, or also the customers, or do we take an even broader view and include society as a whole in our corporate purpose. If the firm has an intrinsic stakeholder commitment and its corporate purpose includes the interests of a broad range of stakeholders, then more CSR initiatives will to be considered ’strategic' for that organization.


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Special Interest Group Leader
Ismael Bena - MBA
Management Consultant

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