STRATEGY AND

SOCIETY
The link between competitive
advantage and Corporate Social
Responsibility

Section C Group 2
Avishek Dasgupta
- 13P
Ashir Madaan - 13P
Kanika Virmani - 13P146
Rahul Aggarwal - 13P
Siddharth Gautam - 13P
Tarun Gupta - 13P177

This article presents a new way to look at the

interdependence of business and society and
shows that corporate success and social welfare
are not a zero sum game.

CSR can be much more than a cost, a constraint and can be a

source of opportunity, innovation and competitive advantage
Led to fragmented approaches to CSR which are disconnected
from business and strategy
Growing Publicity given to company rankings on performance of
their CSR despite their questionable methodologies
Governments, activists and the media hold companies
responsible for social consequence of their activities

Introduction

Emergence of CSR
Public Responses:
For Nike, NY Times reported abusive labor practices

at its Indonesian suppliers in 1990s

Shell Oils decision to sink the Brent Spar, an
obsolete oil rig in the North Sea led to Greenpeace
protests
Pharmaceutical companies expected to respond to
the AIDS pandemic in Africa even though it was far
removed from heir primary product lines and
markets
Fast food and packaged food companies held
Responsible to obesity and poor nutrition

Emergence of CSR
Activists targeting big corporations
Activists tend to target the most visible or successful
corporations to bring attention to an issue, irrespective
of impact
Nestle, worlds largest purveyor of bottled water
became a major target in the global debate about
access to fresh water
Governmental regulations
In UK, companies have to disclose ethical, social and
environmental risk in its annual report

Corporate attitude towards CSR

Currently, most CSR activities are done only for public

relations and media

Led to glossy CSR reports that showcase companies
social and environmental good deeds
Non coherent framework for CSR activities
Philanthropic initiatives are expressed in terms of dollars
or volunteer hours spent but almost never in terms of
impact

Prevailing justification for CSR

Moral Obligation
Achieving commercial success in a way that honors ethical
values and respect cultures, communities and natural
environment
It doesnt tell how to balance one social benefit against
another or against its financial cost

Sustainability
Meeting needs of present without compromising on future
Companies should operate in ways that secure long term
economic performance and avoid social detrimental short
term behavior
It doesnt say anything as to how the tradeoff is to be made

Prevailing justification for CSR

License to operate
Tacit or explicit permission from govt., communities and other
stakeholders
Offers a concrete way of identifying social issues that matter to its
stakeholders
Though it fosters a constructive dialogue, companies often transfer
their CSR agendas to outsiders

Reputation
Used to justify CSR initiatives on the grounds that it will improve
companys image, strengthen brand and raise the value of stock
Studies on companies social reputation on consumer purchases
and stock market performance have been inconclusive

Prevailing justification for CSR

All the four school of thought focus on the tension
between business and society rather than their
interdependence
They are not tied to the strategy and operations of the
company and thus are not sufficient to help the company
identify, prioritize and address social issues that matter it
the most/ where it can create a biggest impact
Result:
Thus they neither create a meaningful social impact nor
strengthen firms long term competitiveness

Integrating Business and Society

(Porter and Kramers theory)
Healthy Society

Successful
Companies

Large level of
Interdependence
between Business and
Society

Both business decisions and social policies

must follow the principle of shared value
creation
Every aspect of a companys value chain comes in
Value Chain impact on
CSR Activities

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
Inside Out Linkages
Impact of a value chain
activity of a company on
the society

Outside In Linkages
Influence of external
social conditions on
organization

Mapping Company Value Chain To CSR:

Looking Inside
Support
Activities

Firm Infrastructure
Human Resource Management
Technology Development

Primary
Activities

Procurement

Inbound
Logistics

Transportation
Impact - Emissions,
Congestion,
Accident

Operation
s
Biodiversity
impact,
Energy &
Water Waste

Outbound
Logistics

Marketing
and sales

Transport
Impacts,
Improper
packaging

Pricing ,
False
Advertise
ments

After
Sales
Service

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

Rules and
Incentives that
govern
competition

Quality of
Business Inputs

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

Local availability
of Supporting
Industries

Sophistication of Local
Demand
Regulatory Standards
Unusual Local needs
that can be served
nationally

Choosing which social issues to address

Value Chain Social

Impacts

Social Dimensions
of Competitive
Context

Social Issues
that are not
significantly
affected by a
companys
operations

Social issues
that are
significantly
affected by a
companys
activities

Social issues in
the external
environment that
significantly
affect drivers of
competitiveness

Has no material
effect on long
term
competitiveness

Touch points
between society
and value chain

Effects are
generally long
term

Generic Social
Issues

Creating a Corporate social agenda

An affirmative Corporate Social Agenda moves from mitigating harm to
reinforcing corporate strategy through social progress

Responsive CSR
Good corporate citizenship
Mitigating harm arising from firms value chain
activities

Strategic CSR
Transform value-chain activities to benefit society
while reinforcing strategy
Strategic Philanthropy that leverages capabilities to
improve salient areas of competitive context
Closer the social issue greater the leverage

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 Biofuels

Strategic CSR
Adding a social dimension to value proposition and

making social impact integral to its overall strategy

resulting in competitive advantage
Why social value proposition is important?
Increasing Government Regulations
Exposure to criticism
Consumers attention to social issues

Organizing for CSR

Create shared value which should be viewed like R&D, a long
term investment in companys future competitiveness
Shift focus from an emphasis on substance rather than
image
Measure social impact rather than stakeholder
satisfaction
CSR needs to be incorporated in the job profiles

Choose which issues to focus upon

What CSR is
Choosing a set of societal
problems that we are best
equipped to resolve
Finding a fit between
strategy and social
responsibility

What CSR is not

Making philanthropic
contributions
Undoing business wrongs

Creating shared value to

lead to self sustaining
solution.

Moral Purpose of Business