Monday, February 21, 2011

Does Corporate Social Responsibility pay off?

The now classic sustainability question, whether Corporate Social Responsibility pays off? or not, which Michael Porter and Mark Kramer, have recently rebranded as "The Big Idea: Creating Shared Value" has been also answered by a recent study "Does Corporate Social Responsibility Pay Off?", which explores the links between CSR and business competitiveness in 4 sectors in the EU.

The report includes this chart, which clearly hits on the core topics for any CSR strategy:

The authors give a positive answer to the main question of whether CSR pays off or not, at least it does at the firm level and cite the following supporting literature:

"A comprehensive literature review has shown that various publications examine the competitive advantage of CSR on a corporate level (e.g. Lankoski, 2008; Smith, 2007; Wade, 2005). The so-called “business case for CSR” analyses CSR on the corporate level and discusses added value companies might gain through responsible behaviour (Garriga et al., 2004). According to this concept, companies view the possibility of furthering their economic success (Branco, 2006) for example through added shareholder value, enhanced market share, reputation and image gains, increased customer loyalty and trust, staff motivation and retention, increased share prices (Beckmann et al., 2006; Hansen et al., 2005). Additionally, the business case perceives CSR engagement as a source of opportunity, innovation and competitive advantage (Porter et al., 2006) as a focus on societal issues and interaction with external stakeholders leads to the development of new products, services and business models."

Finally, I found very interesting Chapter 6, pg. 70 forward, that systematizes the links between CSR and (sector level) competitiveness.

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