Dr. Mark Camilleri
Businesses are capable of implementing responsible behaviours as they pursue their profit-making activities. A thorough literature review suggests that many academic articles have dedicated their energies on organising and evaluating the evidence to establish a link, usually through regression analysis between corporate social responsibility (CSR) or corporate social performance (CSP) and financial performance. Other authors referred to similar concepts as corporate citizenship has evolved following the concepts of stakeholder engagement and business ethics. In the light of these past theoretical underpinnings, this article reports on the many facets of CSR. This contribution puts forward key constructs representing strategic CSR, creating shared value and systematic CSR. It sheds light on the corporate sustainability and responsibility (CSR2.0) notion. This latter perspective suggests that responsible behavioural practices may be strategically re-conceived to confer competitive advantage over rival firms. Therefore, article makes reference to specific examples of some the latest laudable investments that create shared value. It explains how CSR2.0 requires a focus on building adaptive approaches and directing resources towards the perceived demands of diverse stakeholders for the long term sustainability of business. In a pragmatic approach, this contribution indicates that societal demands are not viewed as constraints on the organisation, but more as challenging opportunities which can be leveraged for the benefit of the firm and its stakeholders.
The Business Case for Corporate Social Responsibility
CSR can help to build reputational benefits; it enhances the firms’ image among external stakeholders and could lead to a favourable climate of trust and cooperation within the company 1. It may lead to create value for both business and society 2 3 4. Several authors maintained that through strategic CSR engagement businesses may achieve a competitive advantage 5 6. Empirical studies have shown that there is a correlation between CSR and financial performance 1 3 7. Yet, it may appear that to date there is no explicit, quantitative translation of socially responsible practices into specific results that affect the profit and loss account8. Nevertheless, many companies are defending the correlation between social practices and financial results. The working assumption revolving around the CSP research is that corporate social and financial performance are universally related3. Strategic CSR increases the financial performance; minimises costs through better operational efficiencies, boosts the employee morale and job satisfaction and reduces the staff turnover, along with other benefits3.
CSR can bring a competitive advantage only if there are ongoing communications and dialogue between all stakeholder groups9 10 (including the employees, customers, marketplace and societal groups). The stakeholder relationships are needed to bring external knowledge sources, which may in turn enhance organisational skills and performance. Acquiring new knowledge must be accompanied by mechanisms for dissemination. There is scope in sharing best practices, even with rival firms. It is necessary for responsible businesses to realise that they need to work in tandem with other organisations in order to move the CSR agenda forward3 4. A recent study has indicated that businesses were investing in environmental sustainability, as they minimised their waste by reducing, reusing and recycling resources11. Several others were becoming more conscientious about their environmental responsibilities, particularly in the areas that were in situated in close proximity to their business. They were increasingly protecting the environment as they reduced their pollution through carbon offsetting programmes and the like11. The researcher believes that there is still room for improvement. There are many business practitioners who ought to realise the business case for CSR. Their organisational culture and business ethos could become more attuned to embrace responsible behavioural practices.
Creating Shared Value – Seeking Win-Win Outcomes
In the past, the stakeholder theory has demonstrated how stakeholders could develop long-term mutual relationships, rather than simply focusing on immediate profits. Of course, this does not imply that profit and economic survival are unimportant. On the contrary, this argument is that it is in the businesses’ interest to engage with a variety of stakeholders, upon whom dependence is vital3 4. The businesses’ closer interactions with stakeholders are based on relational and process-oriented views9. Many corporations are already forging strategic alliances in their value chain in order to run their businesses profitably. Some successful businesses are also promoting the right conditions of employment in their supply chains. At the same time, they are instrumental in improving the lives of their suppliers. They do this as they want to enhance the quality and attributes of their products, which are ultimately delivered to customers and end consumers12.
Nestlé, Google, IBM, Intel, Johnson & Johnson, Unilever, and Wal-Mart are some of the multinationals who have somewhat embraced Porter and Kramer’s ‘shared value’ approach. In many cases they are building partnership and collaborative agreements with external stakeholders (including suppliers) hailing from different markets. The notion of shared value is opening up new opportunities for sustainability, particularly with its innovative approach to re-configure the value chain4. Yet, there are academics who argued that this concept ignores the tensions that are inherent in responsible business activity13. “Shared value” cannot cure all of society’s ills as not all businesses are good for society nor would the pursuit of shared value eliminate all injustice. However, the profit motive and the tools of corporate strategy will help to address societal problems14. As a matter of fact, many businesses are reconceiving their products as they take a broad view of their purchasing, procurement and production activities4.
Several multi-national organisations are looking beyond their short-term profits for shareholders. They are also looking after their marketplace stakeholders including suppliers who source their products. Many multinational organisations are redefining productivity in the value chain and enabling local cluster developments to mitigate risks, boost productivity and competitiveness. For instance, Nestlé’s business principles incorporated10 . United Nations Global Compact Principles on human rights, labour, the environment and corruption12. Nestlé is an active member of the Compact’s Working Groups and Initiatives. Nestlé maintains that it complies with international regulatory laws and acceptable codes of conduct, as it improves its company’s operations. Yet, at the same time it helps those suppliers hailing from the least in poorer rural regions of the world. Nestlé has revisited its numerous processes and its value chain activities. Each stage of the production process, from the supply chain to transforming resources adds value to the overall end product. This benefits the company itself. Nestlé sources its materials from thousands of farms from developing countries. The company maintains that it provides training to farmers in order to encourage sustainable production while protecting their procurement, standards and quality of their raw materials. This brings positive, long-term impacts on the local economy. At the same time, these suppliers are running profitable farms, as they are offering their children a better education. Moreover, both Nestlé and its suppliers are committed to protecting their natural environmental resources for their long term sustainability.
Corporate sustainability occurs when a company adds a social dimension to its value proposition, making social impact integral to its overall strategy. The rationale behind the corporate responsibility lies in creating value and finding win-win outcomes by seeking out and connecting stakeholders’ varied interests. Creating shared value (CSV) is about embedding sustainability and strategic corporate social responsibility into a brand’s portfolio. As firms reap profits and grow, they can generate virtuous circles of positive multiplier effects11.
Conclusion
This article provides the foundation of the conceptual theory and empirical enquiry of the discourse surrounding the corporate sustainability and responsibility (CSR2.0) agenda. A thorough literature review reveals that many authors have often investigated the relationship between corporate social responsibility (corporate social performance or corporate citizenship) and financial performance. This contribution maintains that CSR 2.0 initiatives can be re-conceived strategically to confer competitive advantage in the long term. The business case for CSR 2.0 focuses on building adaptive approaches and directing resources towards the perceived demands of stakeholders (Camilleri, 2015). Stakeholder demands are not viewed as constraints on the organisation, but more as challenging opportunities which can be leveraged for the benefit of the firm. This contribution looks at different aspects of CSR2.0, as it makes specific reference to responsible human resources management, environmental sustainability, forging relationships with marketplace stakeholders and strategic philanthropy towards the community. Engagement in these activities will ultimately create shared value for both the business and the society. CSR2.0 unlocks value, as the business and the community become mutually reinforcing. The value creation arguments focus on exploiting opportunities that reconcile differing stakeholder demands. Businesses ought to realise that laudable investments in CSR2.0 can lead to better organisational performance in the long run. This contribution indicates that there are future avenues for further research in this promising area of strategic management. Empirical studies may focus on how socially responsible behaviour, environmental sustainable practices, stakeholder engagement and regulatory interventions may create value for all.
References
1. Camilleri, M.A. “Unlocking shared value through strategic social marketing” (paper presented at the American Marketing Association and the University of Massachusetts Amherst: Marketing & Public Policy Conference, Boston, 6th June 2014): 60-66 Accessed June 26, 2015. https://www.ama.org/events-training/Conferences/Documents/MPP14BO_Proceedings.pdf
2. Sen, Sankar, Chitra Bhanu Bhattacharya, and Daniel Korschun. “The role of corporate social responsibility in strengthening multiple stakeholder relationships: A field experiment.” Journal of the Academy of Marketing science 34, no. 2 (2006): 158-166.
3. Camilleri, M.A. “Creating Shared Value through Strategic CSR in Tourism” Saarbrucken: Lambert Academic Publishing, 2013 – ISBN 978-3-659-43106-7.
4. Porter, Michael E., and Mark R. Kramer. “Creating shared value.” Harvard business review 89, no. 1/2 (2011): 62-77.
5. Crane, Andrew, Abagail McWilliams, Dirk Matten, Jeremy Moon, and Donald S. Siegel, eds. The Oxford handbook of corporate social responsibility. Oxford University Press, (2008).
6. Porter, Michael E., and Mark R. Kramer. “The link between competitive advantage and corporate social responsibility.” Harvard business review 84, no. 12 (2006): 78-92.
7. Orlitzky, Marc, Frank L. Schmidt, and Sara L. Rynes. “Corporate social and financial performance: A meta-analysis.” Organization studies 24, no. 3 (2003): 403-441.
8. Murillo, David, and Josep M. Lozano. “SMEs and CSR: An approach to CSR in their own words.” Journal of Business Ethics 67, no. 3 (2006): 227-240.
9. Morsing, Mette, and Majken Schultz. “Corporate social responsibility communication: stakeholder information, response and involvement strategies.” Business Ethics: A European Review 15, no. 4 (2006): 323-338.
10. European Union. “A renewed EU strategy 2011-14 for Corporate Social Responsibility” last modified December 10, 2014 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0681:FIN:EN:PDF European Commission Publications (2011).
11. Camilleri, M.A. “The Business Case for Corporate Social Responsibility” (paper presented at the American Marketing Association in collaboration with the University of Wyoming, Oklahoma State University and Villanova University: Marketing & Public Policy as a Force for Social Change Conference. Washington D.C., 5th June 2014): 8-14, Accessed June 26, 2015. https://www.ama.org/events-training/Conferences/Documents/2015-AMA-Marketing-Public-Policy-Proceedings.pdf
12. Camilleri, M.A. “Leveraging Organizational Performance through ‘Shared Value’ Propositions” Triple Pundit last modified November 22, 2013 http://www.triplepundit.com/2013/11/leveraging-organisational-performance-shared-value-propositions/
13. Andrew Crane, Guido Palazzo, Laura J. Spence, and Dirk Matten. “Contesting the value of “creating shared value”.” California management review 56, no. 2 (2014): 130-153.
14. A response to Andrew Crane13 article by Porter, Michael E., and Mark R. Kramer (2014) http://www.dirkmatten.com/Papers/C/Crane%20et%20al%202014%20in%20CMR.pdf
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