Part V: A Strategic Perspective

Chapter 10: Strategic CSR

1. Strategic CSR

What aspects of a firm’s operations are

part of strategic CSR?

What aspects of a firm’s operations are not

part of strategic CSR?

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2. Defining Strategic CSR
• In defining strategic CSR, five components are essential:

1. Firms incorporate a CSR perspective within their culture

and strategic planning process.
2. Any actions taken are directly related to core
operations.
3. Firms seek to understand and respond to the needs of
their stakeholders.
4. Firms aim to optimize value created.
5. Firms shift from a short-term perspective to managing
their resources and relations with key stakeholders over
the medium to long term.

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3. First Component: CSR Perspective

• Firms should incorporate a CSR perspective within their culture and

strategic planning process:

Embedding the profit incentive within a framework

of guiding values that set the parameters of decisions
and guide employees in relation to the firm’s strategy
helps managers implement strategic CSR throughout
all aspects of day-to-day operations.

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4. Porter and Kramer’s Strategy and Society
Model

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5. Michael E. Porter and Mark R. Kramer
The Link Between Competitive Advantage and
Corporate Social Responsibility

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6. Second Component: Core Operations
• Any actions taken should be directly related to core operations:

 Strategic CSR will differ from firm to firm depending on each firm’s
expertise and the relevance of the issue to its vision and mission.
 Firms create value as a direct result of their unique mix of
resources and capabilities.
 Firms vary in their areas of expertise and the market segments
they target (and many other dimensions)--they have become
experts in those areas because that is how they define their niche
and survive in a competitive environment.
 As a result, the firm creates the most value when it focuses on
what it does best, which is defined by its core operations.

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7. Third Component: Stakeholder Perspective
• Firms should seek to understand and respond to the needs of their
broad range of stakeholders:

A barrier to the implementation of a stakeholder

perspective is the primary emphasis currently given by
many firms to the interests of their shareholders. Instead,
firms should expand their view to include all stakeholders
who, collectively, define the operating environment.
In doing so, firms have an interest not only in responding
to stakeholder concerns but also in anticipating these
concerns whenever possible.

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8. Fourth Component: Optimize Value

• Firms should aim to optimize value created:

The goal is to seek a balance between the

production and consumption activities in society
in order to build a standard of living that meets the
needs of the collective. The production component
includes incorporating costs that firms currently
seek to externalize, while the consumption
component includes incorporating costs that
society currently seeks to avoid.

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9. Fifth Component: Medium to Long Term
• Firms should shift from a short-term perspective to managing
resources and relations with key stakeholders over the medium to
long term:

 If managers alter their horizons from the next quarter or next

season to the next decade or beyond, they immediately alter
the priorities by which they manage and the nature of the
decisions they make today.
 If a CEO is only interested in the next quarter, it is difficult to
make the case for strategic CSR. But, if the CEO is concerned
with the continued existence of the firm 5, 10, or 20 years
from now, the value of building lasting, trust-based
relationships with key stakeholders increases exponentially.

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10. Strategic CSR

The incorporation of a holistic CSR perspective within a

firm’s strategic planning and core operations so that the firm
is managed in the interests of a broad set of stakeholders to
optimize value over the medium to long term

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11. Strategic CSR Is Not an Option

Strategic CSR is a philosophy of management that infuses

the firm. It is not a peripheral activity; it is central to
everything the firm does. All business decisions have
economic, social, moral, and ethical dimensions. As such,
all firms do strategic CSR, whether they realize it or not; it
is just that some firms do it better than others.

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12. Strategic CSR Is Not Philanthropy
• Strategic CSR is not about philanthropy; it is about day-to-day
operations:

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13. Strategic CSR Is Not Caring Capitalism
• Strategic CSR is not caring capitalism but market capitalism:

 It is not the ends of capitalism that matter so much as

the means by which those ends are pursued. Although
efforts to alter the ends of capitalism are delivered with
the best of intentions, the difficulties in implementation
quickly become apparent when these ideas are
investigated in more detail.
 How is a firm to decide which issue it should prioritize
and devote its most valuable resources to if that
decision is not based on market forces?

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14. Strategic CSR Is Not Sharing Value

• Strategic CSR is also not about sharing value; it is about

creating value:

Business is the solution to market problems/opportunities that create

value as a direct consequence. Firms optimize value, broadly defined,
by combining scarce and valuable resources to meet market needs,
while considering the interests of a broad range of stakeholders
over the medium to long term. Firms can often use their expertise
to assist in meeting nonoperational goals, but this should not
be their primary concern. Governments and nonprofits also play
important social roles where gaps in the market occur.

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15. Strategic CSR Is Business

• Strategic CSR is about business--creating value for a

broad range of stakeholders by focusing on the firm’s
areas of expertise to solve market-based problems:

Because strategic CSR is so thoroughly embedded within core

operations and everyday decisions, it is not something the firm
can choose to do; it is the way business is conducted.

As such, strategic CSR is not something that can be ignored or

relegated in importance--it is what firms do. It is just that some
firms do it better and more deliberately than others.

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16. The Difference Between Non-Productive CSR
and Strategic CSR

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17. Mainstream CSR Versus Strategic CSR

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18. Strategic CSR Debate

• Motion:

Corporate philanthropy is a waste of money.

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19. Questions for Discussion and Review
1. Define strategic CSR in your own words. What are the signs you
would look for to indicate that a firm has implemented a strategic
CSR perspective?
2. What are the five key components of the definition of strategic
CSR? Which of these do you think will generate the greatest
resistance or difficulty for managers?
3. Are shareholders investors or are they speculators? Are they
both? Does your answer to this question affect how you think
about the stock market?
4. Why is strategic CSR not a choice for companies?
5. Are there any firms that you can think of that are currently
practicing strategic CSR as defined in this chapter? If so, what is it
that they are doing differently? If not, which firm is closest, and
what does it need to do to fully implement strategic CSR?

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