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Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility

This document discusses the link between corporate social responsibility (CSR) and competitive advantage. It begins by outlining some key questions around the relationship between business and society. It then provides a brief history of CSR, noting that early approaches often saw business and society as disconnected. The main body of the document introduces Porter and Kramer's theory of creating "shared value" by finding areas where corporate strategy and social progress intersect. It provides examples of mapping a company's value chain to identify social impacts and issues important to competitive context. The document concludes by discussing how companies can develop a strategic social agenda integrated with their value proposition.

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Siddharth Patro
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111 views

Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility

This document discusses the link between corporate social responsibility (CSR) and competitive advantage. It begins by outlining some key questions around the relationship between business and society. It then provides a brief history of CSR, noting that early approaches often saw business and society as disconnected. The main body of the document introduces Porter and Kramer's theory of creating "shared value" by finding areas where corporate strategy and social progress intersect. It provides examples of mapping a company's value chain to identify social impacts and issues important to competitive context. The document concludes by discussing how companies can develop a strategic social agenda integrated with their value proposition.

Uploaded by

Siddharth Patro
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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STRATEGY AND SOCIETY

THE LINK BETWEEN COMPETITIVE ADVANTAGE AND CORPORATE SOCIAL RESPONSIBILITY

THE ISSUE OF CSR VS BUSINESS PERFORMANCE HAS BEEN A


LONGSTANDING DEBATE

Key
Questio
ns

Are corporates responsible for social


consequences of their activities?
Are business and society interdependent ?
Prevailing approaches to CSR too generic?
Is there a framework to evaluate the effects
companies have on society?
Can CSR be more that a cost, a constraint, or a
charitable deed?

EMERGENCE OF CORPORATE SOCIAL RESPONSIBILITY


Not always
voluntary

Focuses on tension between business and society rather than on their


interdependence- complete disconnect form companys strategy

Corporates
approach

Focuses on tension between business and society rather than on their


interdependence- complete disconnect form companys strategy

Moral
Obligation.
Sustainabili
ty.
License to
Operate.
Reputation

Ex: honesty in filing financial statement.


Cannot weigh social benefit against financial cost,
Ex: moral principles cant tell pharmaceutical companies where to allocate resources to develop
cures
for future new practices to wrap its food.
Ex: McDonald's
It is very vague,
Ex: transparency may be more sustainable than corruption & good employment practices can be
very
sustainable
Ex: chemical
company having license to operate.
But these are short term,
Ex: forbearance of their neighbor may be short lived
Ex: Energy companys social responsibilities in form of insurance.
Company rarely finds the strategic benefit that it is seeking, leading to high profile cause related
marketing
campaigns,
Ex: in event
of crisis there would still be public criticism

INTEGRATING BUSINESS AND SOCIETY


(PORTER AND KRAMERS THEORY)
Large level of
Interdependence between
Business and Society

Successful corporations need a healthy society


And healthy societies needs successful companies

Value Chain impact on CSR


Activities

Every aspect of a companys value chain comes in contact with


the society either in a positive or negative manner.
A company can strategise its CSR through mapping its value
chain touch points on society

Both business decisions and social policies must follow


the principle of shared value creation

Inside
Outside
Out
In
Competitive context for
Activities in the Firms Value
firms
Chain
*Bajaj Auto is a great example of this as it has been able to create shared value through its
women and people empowerment programs (Inside Out) and its Rural development projects
(Outside in)

MAPPING COMPANY VALUE CHAIN TO CSR: LOOKING INSIDE


Support
Activities

Firm Infrastructure
Human Resource Management
Technology Development

Primary
Activities

Procurement

Emissions,
Congestion,
Accident

Inbound
Logistics

Operatio
ns

Biodiversity
impact, Energy &
Water Waste

Outboun
d
Logistics
Transport
Impacts,
Improper

Marketin
g and
sales

After
Sales
Service

Pricing ,
False
Advertiseme

Disposal of Obsolete
Products, Customer
Privacy

MAPPING THE DIAMOND TO CSR: LOOKING OUTSIDE


*Availability of Human Resources
*Access to research Institutions
and universities
* Efficient Physical Infrastructure

Context for
Firm Strategy
and Rivalry

Related and
Supporting
Industries
*Availability of Ancillary Industries
*Presence of Clusters
*Presence of Related Firms

*Fair Competition (absence of


trade barriers)
*IP Protection
Transparency (Financial
Reporting)
Rule of law
Local Demand
Conditions

Factor
Conditions

*Sophistication of Local Demand


*Regulatory Standards
*Unusual Local needs that can be
served nationally

CHOOSING WHICH SOCIAL ISSUES TO ADDRESS


Generic Social
Issues

Value Chain
Social Impacts

Social Issues
that are not
significantly by
a companys
operations
Has no material
effect on long
term
competitiveness

Social issues
that are
significantly
affected by a
companys
activities
Touch points
between society
and value chain

Social
Dimensions of
Competitive
Context
Social issues in
the external
environment
that
significantly
affect drivers of
competitiveness
Effects are
generally long
term

CHOICE OF SOCIAL ISSUES: APPROACH


Carbon
Emission
Generic Issues

Value chain
social impact
Competitive
context

Financial
Institution Eg.
Bank
Automobile
manufacturer
Eg. Toyota
Transport base
company Eg.
UPS

AIDS pandemic
in Africa
Retailer
Eg. Walmart
Pharmaceutical
company
Eg. Glaxo Smith
Kline
Mining company.
Eg. Anglo
American

Supporting a
Dance Company
Electricity
Supply Company
Eg. Edison
An Arts, Music
and Craft
promoting
company
Credit company
American
Express

Promoting
Vocational
Education
Telecom Major
Eg. Bharti Airtel
Information
Technology
Services Firm Eg.
HCL tech
Tyre Company
Eg. MRF Tyres

These choices will vary from industry to industry , Among SBUs, and among locations. Eg.
Volvo safety vs Toyota Environment
Need to Integrate All three objectives. Example. ITC e-Choupal

CREATING A CORPORATE SOCIAL AGENDA


An Affirmative Corporate Social Agenda moves from mitigating harm to reinforcing
corporate strategy through social progress
Responsive
CSR

Company Corporate Citizenship


Reduce/mitigate Value chain causes of Harm

Strategic
CSR

Strategic Social efforts that leverage company capability to improve


competitive context
Transform value chain activities to benefit society while reinforcing
strategy
Good
Mitigate vale
Strategic Social
Citizenship
chain activities efforts that
causing harm
leverage
company
Transform
capability
value chain to
benefit society
Responsive

CREATING A SOCIAL DIMENSION TO THE VALUE


PROPOSITION
Unique Value
Proposition

Lies at the heart of every strategy. A set of needs that


only the company can meet

The Most Strategic CSR occurs when a company


adds a social dimension to its value proposition
Whole Foods Market
Unique Value
Proposition
Social Dimension

Sell, Organic, natural and healthy food products to


customers who are passionate about food and the
environment
*Critical analysis of procured ingredients to weed out
unhealthy or environmentally damaged ones
*Use of Unbleached and Unbromated Flour
*Use of Environment Friendly energy
*Turning Bio-Degradable waste into Biofeuls

THANK YOU

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