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The Relationship between Strategic Corporate Social Responsibility and Business Performance: an Empirical Investigation

Strategic CSR

The latest view among theorists is that CSR can become a source of competitive advantage. However, companies can enhance their performance only if they use CSR properly; this means that companies should engage in Strategic CSR.
Although this concept was discussed also before (e.g. see Andrews, 1973), the literature about its relevance has proliferated in the last decade. Baron (2001) defined Strategic CSR as a "profit-maximizing strategy that some may view as socially responsible"; hence, CSR practices can also have benefits for society (positive externalities), but they cannot be called strategic if 'profit-maximization' is missing. This element distinguishes Strategic CSR from Altruism, which is, instead, a voluntary redistribution of resources.
One of the most influencing theories about the importance of CSR was the one developed by Porter and Kramer in a series of subsequent publications (2002, 2006, 2011).
Firstly, Porter and Kramer (2002) dealt with the theme of corporate philanthropy. They asserted that it is worth for companies to engage in philanthropy if this is context-focused: only with this kind of philanthropy companies can improve the competitive context in which they operate, bringing both benefits to them and to that location. This is paramount because companies and the contexts in which they operate are closely intertwined, so that practices that benefit both companies and society have a multiplier effect on the general benefits. Therefore, companies investments in philanthropy should be selective.
Subsequently, Porter and Kramer (2006) criticised "Cosmetic CSR", meaning those policies focused on publicising CSR in a marketing perspective rather than integrating it in business strategy.
The authors argued that the main reasons for engaging in CSR were based on the tension between business and society; instead, companies should focus on the interconnections between them, pursuing "shared value", which means decisions that mutually reinforce business and society benefits. To maximize shared value, a company should "select issues that intersect with its particular business" rather than engaging in generic social issues, and should privilege a Strategic CSR (integration in the core business) over a Responsive CSR (marketing perspective). The two dimensions are linked, as a strategic perspective includes the necessity of making trade-offs (Porter, 1996) and , thus, selecting specific issues on which to focus.
Finally, Porter and Kramer (2011) reinforced the concept of "shared value", opposing mere CSR with CSV (Creating Shared Value). To some extent, this difference recalls the difference between Responsive and Strategic CSR. What is new is that companies should consider social harms as causing internal costs, so that social investments must be regarded as cost-reducing rather than an additional cost; moreover, shared value is not about redistribution but about "expanding the total pool of economic and social value", so that even activities like fair trade, which is more concerned with redistribution, cannot be considered CSV. Here, the concept of shared value is taken to the extreme, and is identified with a new form of capitalism that should seek "profits involving a social purpose".
Kramer and Kania (2006) approached CSR from a double perspective. They stated that companies often see CSR as a vulnerability and they are stuck in their stereotypical role of profit-maximizer. This approach led to what they called Defensive CSR, which is just a PR activity on the company's side and is ineffective on the social side. Instead, Offensive CSR, with which companies proactively seek to solve social issues, is far more effective and rewarding.
However, the two approaches are not mutually exclusive but complementary; indeed, the Defensive approach leads to short-term gains while the Offensive approach is long-term oriented.
Therefore, a combination of the two approaches can bring advantages in both periods.
Finally, Zadek (2004)'s approach recalls the historical evolution of CSR. Indeed, Zadek identified "Five Stages of Organizational Learning", which reflect increasing levels of commitment to social responsibility: Defensive, Compliance, Managerial, Strategic and Civil stage. Moreover, he identified "Four Stages of Issue Maturity", which reflect four increasing degrees of importance of social issues: Latent, Emerging, Consolidating and Institutionalised.
The combination of the two dimensions provides a practical guidance for companies: as the degree of maturity of social issues increase from Latent towards Institutionalized, the 'proactivity' of the CSR approach needs to increase from Defensive towards Civil in order to take advantage of the opportunities of social investments, otherwise CSR will only be a cost.
The theories examined so far contradict Friedman's approach about CSR, but at the condition that CSR is implemented in a strategic way.
A question that comes natural at this point is: what are the benefits brought by CSR in terms of Business Performance? It is difficult to give a univocal answer, because there are various dimensions of CSR and each can have a different impact on various measures of Business Performance. However, whatever the answer, theorists generally regard CSR investments as advantageous.

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The Relationship between Strategic Corporate Social Responsibility and Business Performance: an Empirical Investigation

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Informazioni tesi

  Autore: Alessandro Bettiol
  Tipo: Laurea liv.I
  Anno: 2012-13
  Università: Università degli Studi di Padova
  Facoltà: Economia
  Corso: Economia aziendale
  Relatore: Enrico Rettore
  Lingua: Inglese
  Num. pagine: 53

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