What is Strategic Corporate Social Responsibility?
Organisations engage in Strategic Corporate Social Responsibility (Strategic CSR) when they integrate responsible behaviours in their corporate practices (Camilleri, 2018; Porter & Kramer, 2011). Therefore, Strategic CSR is often evidenced by the businesses’ engagement with key stakeholders, including customers, employees, shareholders, regulatory authorities and communities as their non-financial activities can have an effect on society and the natural environment (Camilleri, 2017a). The ultimate goal of strategic CSR is to create both economic and social value (Carroll & Shabana, 2010; Falck & Heblich, 2007).
Introduction
The businesses’ CSR practices may result in a sustained competitive advantage if they are willing to forge strong relationships with their stakeholders (Camilleri, 2015a; Freeman, & McVea, 2001). Therefore, businesses ought to communicate with employees, customers, suppliers, regulatory stakeholders as well as with their surrounding community (EU, 2016; Bhattacharya, Korschun & Sen, 2009). Positive stakeholder relationships can lead to an improved organizational performance, in the long run (Camilleri, 2015a).
The most successful businesses are increasingly promoting the right conditions of employment for their employees, within their supply chains (Camilleri, 2017b). They are also instrumental in improving the lives of their suppliers (Camilleri, 2017c; Porter & Kramer, 2011). They do so as they would like to enhance the quality and attributes of their products or services; which are ultimately delivered to customers and consumers. Hence, their long-term investments on strategic CSR activities are likely to yield financial returns for them. At the same time they will add value to society (McWilliams et al., 2006; Falck & Heblich, 2007). Therefore, the strategic CSR involves the promotion of socially and environmentally responsible practices they are re-aligned with the businesses’ profit motives (Camilleri, 2017b,c).
Key Theoretical Underpinnings
The Strategic CSR perspective resonates well with the agency theory. In the past, scholars argued that the companies’ only responsibility was to maximise their owners’ and shareholders’ wealth (Levitt, 1958; Friedman, 1970). Hence, companies were often encouraged to undertake CSR strategies which can bring value to their businesses and to disregard those activities which are fruitless. However, at times, the fulfilment of philanthropic responsibilities can also benefit the bottom line (Lantos, 2001).
Although, it could be difficult to quantify the returns of responsible behaviours, relevant research has shown that those companies that practiced social and environmental responsibility did well by doing good (Falck & Heblich, 2007, Porter & Kramer, 2011).Some of the contributions on this topic suggest that corporate philanthropy should be deeply rooted in the firms’ competences and linked to their business environment (Camilleri, 2015; Porter & Kramer, 2002; Godfrey, 2005). Many authors often referred to the CSR’s core domains (economic, legal and ethical responsibilities) that were compatible and consistent with the relentless call for the business case of CSR (Camilleri, 2015b; Carroll & Shabana, 2010, Vogel, 2005).
Many commentators argued that the strategic CSR practices may result in a new wave of social benefits as well as gains for the businesses themselves (Fombrun et al., 2000; Porter & Kramer, 2011) rather than merely acting on well-intentioned impulses or by reacting to outside pressures (Van Marrewijk, 2003). Lozano (2015) indicated that the business case is the most important driver for CSR engagement. Thus, proper incentives may encourage managers ‘to do well by doing good’ (Falck & Heblich, 2007). If it is a company’s goal to survive and prosper, it can do nothing better than to take a long-term view and understand that if it treats society well, society will return the favour. Companies could direct their discretionary investments to areas (and cost centres) that are relevant to them (Gupta & Sharma, 2009). The reconciliation of shareholder and other stakeholders addresses the perpetual relationship between business and society, as companies are expected to balance the conflicting stakeholder interests for long term sustainability (Orlitzky et al., 2011; Camilleri, 2017c; Camilleri 2019).
Conclusion
Many companies are increasingly recognising the business case for CSR as they allocate adequate and sufficient resources to financial and non-financial activities that will ultimately benefit their stakeholders. Their motivation behind their engagement in strategic CSR practices is to increase their profits and to create shareholder value. At the same time, they strengthen their competitive advantage through stakeholder management.
References
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Substantia Mea 