CSR and Strategy

There are many definitions of strategy
The one definition we all agree on in management is strategy is the pursuit of competitive advantage

There are two approaches to social responsibility and strategy
Creating Shared Value (CSV)
CSR
Generally speaking, it is seen that creating shared value is a socially responsible way to contribute to competitive advantage and unfortunately a lot of CSR programs are seen to be detracting from competitive advantage.
However, this seems black and white, when there is a lot more gray areas in between the two.

Creating Shared Value (CSV)
Basically, an approach that states, by making stakeholders stronger, you as a firm also become stronger.
Examples of CSR in action:
You can reconceive products or markets
You can also redefine productivity in a value chain
Procurement
Distribution
Locating things closer together (Geography)
Supporting industry clusters
The main take away from the Creating Shared Value (CSV) is that there are ways to socially responsible that contribute to your competitive advantage, you do better for yourselves, your customers, and your stakeholders, and you become better than your competitors as well at the same time, that is creating shared value

CSR
CSR does not necessarily imply this,
Social reporting,
The Triple Bottom Line Report – a way of accounting across three different lines of analysis
Financial Level of Accounting – dollars and cents coming and going
Social Level of Accounting – giving money to the local community and that has some sort o social value and we are putting a dollar amount on that
Environment Level of Accounting – we are doing something good for the environment and that has some sort of a social value
Transparency – basically means that a company has social strategies and financial reporting processes that are totally visible to external observers, or a degree to which they are observable to external observers
Sustainability Reporting – basically means you document and disclose how much your corporate operations conform to the idea of sustainable development.
Sustainable development – is the economic growth that meets the needs of today without sacrificing the welfare of the social or communities or the environment of future generations, to do good for today and not hurting the people of tomorrow
Assurance – a verification, by paid auditors, to ensure the CSR report is correct

Costly errors in CSR analysis and implementation

Giving no coherent or systematic thought to CSR, Does the CSR give a benefit to the company or does it even hurt the communities?
CSR strategies can typically be reactive and they do not have anything to do with major social impacts, they don’t have anything to do with the company’s core competencies or business strategies, they basically just write a check and fire and forget, and to make matters worse, they may put CSR business issues within a separate business unit in the firm and there is no oversight at all, so imagine having an employee, and you say, know what…I like you, here is an office, 10 million dollars, figure out what to do with it, but I as a CEO am not going to have anything to do with it, I’m not going to look, I’m not going to check, I’m not going to verify, I trust you, and that you will do the right thing, This is not a very realistic assumption or act.
The reporting standards for CSR may not be credible.

Other items that stem from CSR

Corporate Philanthropy – basically means giving money, property, or work for the welfare for society. This is the other costly mistake of CSR, just treating the company as a charity and just giving money to causes without any sort of major break. Most companies don’t give a lot of money out, you can use up to 10% of taxable earnings as a deduction, but most companies don’t even give more than 1% away to charitable causes. Overall philanthropy in the US comes from individuals not corporations.
Strategic Philanthropy – it is basically the same thing as creating shared value (CSV), it is the idea that you can give money to a charitable cause and it some way benefits the community, for example, you donate money to the local elementary school so the workers in that community will be more educated
Cause Marketing – another form of strategic philanthropy, there is a degree of philanthropy based on the price, for example, for every box of cookies you buy the girl scouts get some sort of portion of it, and so when you buy a box of girl scout cookies you are basically supporting the girl scouts, it appeals to the conscience of the customer but in other forms of strategic philanthropy or cause marketing it can be said that they are just using the suffering of others to promote the sale of a product

свернуть