7/28/2019 Ch 2 - CSR as the Competitive Advantage (1)
1/23
CSR as the Competitive Advantage of
Business Finding shared value
7/28/2019 Ch 2 - CSR as the Competitive Advantage (1)
2/23
CSR What does it means? CSR is about how companies manage the business
processes to produce an overall positive impact on
society
7/28/2019 Ch 2 - CSR as the Competitive Advantage (1)
3/23
CSR can benefits to business and society But CRS first of all can be a source of opportunity,
innovation, and competitive advantage of a
company If company understand the relationship between business
and society in any properly task
CSR can become a source of tremendous social progress,as the business applies its considerable resources, expertise,
and insights to activities that benefit society
7/28/2019 Ch 2 - CSR as the Competitive Advantage (1)
4/23
The Emergence of CSRo From the beginning of CSR development it hasnt been
entirely voluntary practice that is why many companies
was surprised when they faced unexpected problemso Nike: boycott of consumers as a response to the issue of
Indonesian supplier who applied abusive practices to its labors
o
Shell Oils: Green peace protested against it decision to sinkobsolete oil rig in the north sea
o Pharmaceutical companies: it was discovered that they
were expected to respond to the AIDS pandemic in Africa.
Even it was far removed from their primary product lines andmarkets.
7/28/2019 Ch 2 - CSR as the Competitive Advantage (1)
5/23
Four components of CSR Moral obligation- emphasizes that companies have a duty to be good
citizens and to do the right thing. Companies can fully archive
commercial success only in ways that respect ethical values, people,
communities, and the natural environment (Any weakness?)
Sustainability-emphasizes environmental and community stewardship
Meeting the needs of the present without compromising the ability of future
generations to meet their own needs(Norwegian Prime Minister Gro Harlem
Brundtland, 1980) (Any weakness?) License to operate emphasizes that every company needs implicit or
explicit permission from governments, communities, and other
stakeholders to do business (Any weakness?)
Reputation-justifies CSR initiatives on the grounds and will improve acompanys image, strengthen its brand, liven up it morale, and even can
raise the value of its stock(Any weakness?)
7/28/2019 Ch 2 - CSR as the Competitive Advantage (1)
6/23
Successful companies=Healthy society To advance CSR practices of each company, anchoring
them in strategies and activities, its needed to understand
the interrelationships between a corporation andsociety
The mutual dependence of corporations and society
implies that both business decisions and social policiesmust follow the principle ofshared value
That is why a company must integrate a social
perspective into the core frameworks in order tounderstand competition and guide its business strategy
7/28/2019 Ch 2 - CSR as the Competitive Advantage (1)
7/23
Approach to advance CSR Identify the points of intersection
Choose which social issues to address
Create a corporate social agenda
Integrate inside-out and outside-in practices
Create a social dimension to the value proposition
7/28/2019 Ch 2 - CSR as the Competitive Advantage (1)
8/23
Identify the points of intersection The interdependence between a company and society
takes two forms:
1. inside-out linkages: a company imposes upon societythrough its business operations and creates either positive
or negative social consequences.
Without a careful process for identifying evolving social effects oftomorrow, firms may risk their survival
2. outside-in linkages: an external social conditions also
influence corporations, but either for better or for worse.
Ensuring the health of the competitive context benefits
both the company and the community
7/28/2019 Ch 2 - CSR as the Competitive Advantage (1)
9/23
Competitive context areas
1. the quantity and quality of available business inputs
(exp. human resources, or transportation infrastructure)
2. the rules and incentives that rule competition
(exp. policies that protect intellectual property, ensure transparency, safeguardagainst corruption, and encourage investment)
3. the size and sophistication of local demand
(exp. standards for product quality and safety, consumer rights, and fairness in governmentpurchasing)
4. the local availability of supporting industries
(exp. service providers and machinery producers)
Any and all of these aspects of context can be opportunitiesfor CSR initiatives
7/28/2019 Ch 2 - CSR as the Competitive Advantage (1)
10/23
Social conditions Social conditions form a key part of competitive
context that has great strategic importance for both
companies and societies, and give to companies theability to carry out its strategy especially in the longrun
7/28/2019 Ch 2 - CSR as the Competitive Advantage (1)
11/23
Influence of social factors The ability to recruit appropriate human resources may
depend on a number of social factors that companies can
influence, such as the local educational system, theavailability of housing, the existence of discrimination
(which limits the pool of workers), and the adequacy ofthe public health infrastructure.
7/28/2019 Ch 2 - CSR as the Competitive Advantage (1)
12/23
Choose which social issues to addressA company must select issues that intersect with its particular business,
other social issues are better to leave to those who are better positioned
to address them
Generic issue is important for society but doesnt affected by thecompany
Value chain social impacts are significantly affected by the companys
activities
Social dimensions of competitive context are factors in the external
environment that significantly affect competitiveness of the companys
operations
Some issues can be applied widely, some can be applicable and appropriate
only for the specific industry
The more closely social issue tied to the companys business, the greater the
opportunity to leverage the firms resources and capabilities, and benefit society
7/28/2019 Ch 2 - CSR as the Competitive Advantage (1)
13/23
Social Issues Challenges
Health care benefits make fewerchallenges for
software development or biotechnology firms, whereworkforces tend to be small and well compensated,
Health care benefits make more challenges for
retailing, which is heavily dependent on large numbers oflower-wage workers.
7/28/2019 Ch 2 - CSR as the Competitive Advantage (1)
14/23
Competiveness
Volvo has chosen to make safety as a central elementof it competitive positioning
Toyota has built it competitive advantage from the
environmental benefits of its hybrid technologies
7/28/2019 Ch 2 - CSR as the Competitive Advantage (1)
15/23
Effective corporate citizenship initiatives GEs program contributes between $250,000 and $1
million over a five-year period to each underperforming
public high schools, it managers take an active role bysupporting and encouraging students . In the result is
significant improvement within 10 years in all schools and
in addition graduation rate has increased from 30% to
60%.
Society benefit , the company creates goodwill and
improve relations with local governments
7/28/2019 Ch 2 - CSR as the Competitive Advantage (1)
16/23
Shared value opportunities arising from
investment Microsoft with American Association of Community
Colleges (AACC) cooperation: Microsoft contributed
products and $50 million within five years and sentemployees voluntary in order to help to the community
colleges to improve their programs and education of the
students.
In the result: many communities benefited from Microsoft
actions, in the same time the company obtained manynew high educated workers
7/28/2019 Ch 2 - CSR as the Competitive Advantage (1)
17/23
Integrate inside-out and outside-in in
practice
When value chain practices and investments in
competitive context are stick together these create
powerful tool for creating economic and social value
7/28/2019 Ch 2 - CSR as the Competitive Advantage (1)
18/23
Integrating Companys Practice Nestle: the company invested in local infrastructure of
northern district of India, and transferred its support,
knowledge and technologies directly to small farmers. Inresult Nestle produced enormous social benefits, such as
improved health care, education, and entirely life of Indian
farmers, while getting direct access to the commodities it
needs to maintain a profitable global business
In this case Nestl's distinctive strategy is inseparablefrom its social impact
7/28/2019 Ch 2 - CSR as the Competitive Advantage (1)
19/23
CSR is important to competitive success Strategy is always about making choices, and success in
CSR is no different
From the information obtained from the case we canconclude that creation of shared value should be viewed
like research and development, as a long-term investment
in a companys future competitiveness Moreover corporate philanthropy would generate many
benefits to both business and society if consistentlyinvested using the principles have outlined
7/28/2019 Ch 2 - CSR as the Competitive Advantage (1)
20/23
Conclusion Efforts to find shared value in operating practices and in the social dimensions of
competitive context have the potential not only to foster economic and social
development but to change the way companies and society think about each
other Perceiving social responsibility as building shared value rather than as damage
control will require dramatically different thinking in business, however, CSR will
become increasingly important to competitive success
Corporations are not responsible for all the worlds problems, nor do they havethe resources to solve them all
But each company can identify the particular set of social problems, solve them
and gain the greatest competitive benefit for both society and company
7/28/2019 Ch 2 - CSR as the Competitive Advantage (1)
21/23
7/28/2019 Ch 2 - CSR as the Competitive Advantage (1)
22/23
Contribute to both Business Society!
7/28/2019 Ch 2 - CSR as the Competitive Advantage (1)
23/23
Case Try to propose a CSR initiative for any company that you
are familiar with based on our lecture material today