Competitive Advantage And Corporate Social Responsibility Management Essay

private-enterprise(a) Advantage And Corporate Social righteousness Management EssayThe predilection of stakeholder get along to strategical perplexity declare oneselfs that managers moldiness formulate and implement processes which reward solely and only those groups who generate a stake in the commerce. The chief(prenominal) task in the process is to manage and integrate the relationships and interests of sh areholders, employees, customers, suppliers, communities and other groups in a way that ensures the long- term success of the immobile.Stakeholder approach suggests that we repaint our experience of the firm. For soundly or ill, there are myriad groups who lay down a stake in the success of the firm. Many traditional views of strategy take on ignored some stakeholders, marginalized others and consistently traded-off the interests of others against favoured stakeholder groups. Such an approach may healthy be appropriate in relatively stable environments. However , changing innovation the limitations of traditional approaches to strategic management become increasingly apparent. The interests of key stakeholders must be co-ordinated into the very purpose of the firm, and stakeholder relationships must be managed in a coherent and strategic fashion1.2. ostiary, M. E., Kramer, M. R., (2006). Strategy and society The unify between competitive advantage and incorporate genial responsibility. (2006, December) (Harvard Business Review), 84(12), p. 76-92.Although businesses commit become increasingly aware of stakeholder pressure to demonstrate a load to their corporate kindly responsibilities (CSR), this does not necessarily mean the adoption of an integrated and strategic approach to CSR. Rather, as Michael doorman (Harvard Business School, Boston) and Mark Kramer (John F Kennedy School of G everywherenment, Massachusetts) have recently argued in the Harvard Business Review (December 2006), stream approaches to CSR are fragmented and d isconnected from business goals. This has resulted in disparate and labile initiatives designed to mollify vocal stakeholders or deflect attention from questionable business practices, and these have justifiably been criticised as feel good trade campaigns which have failed to generate bottom line benefits. porters beer and Kramer suggest a sensitive approach to CSR which two (i) acknowledges the interdependence of companies and the broader community, and (ii) enables companies to get a tailored, quite an than generic, CSR strategy. In this way, companies will make the most significant social jar and reap the superlative business benefits. This note provides a summary of doorman and Kramers article, giving special(a) attention to the applicative issues of creating a tailored corporate social order of business.2.1 BackgroundCompanies which have responded to their CSR have usually done so for one, or a combination, of the quest quadruple reasons/principles moral obliga tion, sustainability, compliance or reputation. Moral obligation refers to the compulsion for companies to be good citizens and do the set thing. The sustainability argument emphasises the need for companies to have regard to the natural environment from which resources are drawn. The compliance or licence to operate argument reflects a pragmatic response to agendas set by Government regulators, and the reputation impetus is all about creating a positive impression on consumers, staff and shareholders. gatekeeper and Kramer identify the individual deficiencies of each of these principles as a sufficient justification for CSR (e.g. they argue that the sustainability school of thought raises questions about balancing long term objectives against short term costs, but offers no framework for resolution). Fundamentally however, Porter and Kramer argue that there is an inherent weakness in all four school of thought, namely they focus on the tension between business and society, inste ad than their interdependence. Further each strategy creates a generic rule that is not tied to the strategy and operations of any particularized corporation or the places in which it operates.Porter and Kramer argue that the deficiencies in approach to CSR have resulted in unco-ordinated and non-strategic activities that neither make any pregnant social trespass nor strengthen the firms long-term competitiveness. Having set the scene, Porter and Kramer suggest a in the buff-fashioned approach to CSR to achieve these outcomes.2.2 A new approachPorter and Kramers new approach has two key elements. Firstly, they suggest that a CSR strategy should be predicated on an acceptance of the interdependence of business and society, i.e. successful corporations need a healthy society and a healthy society needs successful companies. Porter and Kramer suggest that the points of intersection between companies and society are both inside-out linkages (i.e. internal activities which affect the external environment such(prenominal) as hiring practices, emissions and waste control) and outside-in linkages (i.e. social conditions which affect a companys capacity to conduct business, e.g. rules and regulations, local education and health supports). This platform of understanding implies that both business finiss and social policy have shared observes, and lifts CSR from a nice to do (which is reverberative of the moral obligation argument or philanthropic approach to CSR) to the have to do (which, although not acknowledged by Porter and Kramer, is an extension of the sustainability argument).Secondly, and this is the original benefit of Porter and Kramers thesis, they argue that each company should create a tailored (rather than a generic) corporate social agenda, and provide a practical tool to chart that agenda i.e. to identify those areas of social context with the greatest strategic value.2.3 The practice of developing a new CSR strategyPorter and Kramers practi cal tool to developing a new CSR strategy encompasses the following stepsChoosing which social issues to address. The essential test that should guide CSR is not whether the caseful is worthy, but whether it presents an opportunity to create shared value that is, a meaningful benefit for society that is also meaningful to the business. Porter and Kramer argue that companies should mannikin social issues into three categories (i) generic social issues which affect all companies (ii) value chain social impacts which have a direct affect on the companys ordinary course of business and (iii) social dimensions of competitive context which importantly affect the underlying drivers of a companys competitiveness in a specific location. Once the social issues have been categorised they should be ranked, i.e. prioritised, for actionCreating a corporate social agenda. The selected social issues should be identified in an clear and affirmative corporate social agenda. This agenda will refl ect an approach to CSR which is bothresponsiveto stakeholder concerns and anticipated risks, andstrategic(i.e. integrates inside-out and outside-in linkages)Organising for CSR. The corporate social agenda should be integrated into affirmative business practices, i.e. to ensure that operating management is engaged in processes that identify and prioritise social issues ground on their salience to business operations and their importance to the companys competitive context. Further, Porter and Kramer suggest that amount of outcomes is critical to the agenda, and that value chain and competitive context endowments in CSR need to be incorporated into the performance managers with PL responsibility. In particular Porter and Kramer argue for the measurement of the CSR initiatives in terms of social impact (although pull out to discuss what those measures might be).ConclusionPorter and Kramer offer a new approach to CSR which focuses on identifying the shared values between a particula r company and its social context, and developing a tailored and strategic response. utilise Porter and Kramers tool to map social opportunities, and practical steps to identify, develop and organise for CSR, companies now have a new CSR framework to put up business and social outcomes. If companies are able to successfully use this puzzle (and Porter and Kramers article provides numerous case studies to that effect) then the benefits will be reaped in terms of both a competitive advantage and social enhancement.3.An Empirical Analysis of the Strategic Use of Corporate Social Responsibility by Donald S. Siegel and Donald F. VitalianoIn a recent insightful survey of CSR, The economist (2005, 8) identified four varieties of CSR based on whether this activity raised or lowered profits and raised or lowered social welfare. This idea constitutes the first empirical test of recent theories of strategic CSR. Specifically, we focus on the importance of the type of product or service sol d by a firm as a determinant of managements decision to invest in CSR. This decision could represent a signaling device regarding the part of the firms output. Consistent with these theories of strategic CSR, we find that firms change durable experience goods or assurance services are much more likely than alike(p) firms to be socially responsible. Ceteris paribus, our results imply that a firmselling financial services (a faith service) is more likely to opt for CSR by about 23 luck points (compared to firms selling search goods). Similarly, a firm producing durable experience goods, such as automobiles or software, is more likely (than a firm selling search goods) to be socially responsible by about 15 percentage points. Firms selling experience services or nondurable experience goods, by contrast, are no more likely to adopt CSR than a firm whose product is a search good. While additional research is inevitable to pin down the diverse reasons why firms adopt a CSR stance, the narrate presented here supports a view that it is consistent with strategic theories of CSR and rational, profit-seeking management decision making. Others may view the same evidence as proof that CSR is a fraud or smokescreen to disguise the same behavior, which they abhor. Regardless of interpretation, we desire that this exploratory paper stimulates additional empirical research on the strategic use of CSR.Several caveats should be mentioned. The first is that our empirical analysis is based on a single cross section of data. It would be useable to test theories of strategic CSR using panel data, which would enable us to violate control for unobserved firm heterogeneity and changes in CSR behavior and its determinants over time. A second concern is the possibility that our econometric analysis is checkmate to omitted variables bias in contrast to ordinary least squares estimation, the estimated Co-efficients in a probit model would be inconsistent even if the omitted var iables are uncorrelated with the include regressors (see Greene, 2000, p. 828). It is impossible to assess the importance of this effect on our estimates of the impact of good type on the propensity of firms to engage in CSR.It is also delicate to classify a company cleanly into selling search, experience, or credence goods and service. Although we eliminated conglomerate firms from our sample and relied on the firms primary products or services for our persistence classification, we recognize that many firms are diversified, which introduces a certain amount of measurement error in our empirical analysis. In an ideal world, the division or perhaps, the plant or establishment would serve as the unit of analysis, rather than the firm.