Strategy and Society
Strategy & Society
The Link Between Competitive Advantage and Corporate Social Responsibility
The Idea in Brief
Many firms’ corporate social responsibility (CSR) efforts are counterproductive, for two reasons: They pit business against society, when the two are actually interdependent. And they pressure companies to think of CSR in generic ways, instead of crafting social initiatives appropriate to their individual strategies. CSR can be much more than just a cost, constraint, or charitable deed. Approached strategically, it generates opportunity, innovation, and competitive advantage for corporations—while solving pressing social problems. How to practice strategic CSR? Porter and Kramer advise pioneering innovations in your offerings and operations that create distinctive value for your company and society. Take Toyota. The company’s early response to public concern about auto emissions gave rise to the hybrid-engine Prius. The Prius has not only significantly reduced pollutants; it’s given Toyota an enviable lead over rivals in hybrid technology.
The Idea in Practice
To practice strategic CSR: 1. Identify points of intersection between your company and society. • In what ways does your organization affect society? For example, do you provide safe working conditions and reasonable wages? Do your operations create environmental hazards? • How does society affect your competitiveness? For instance, do countries where you operate protect intellectual property? Supply enough talented workers? Encourage outside investors? 2. Select social issues to address. Given your company’s and society’s impact on each other, how might you address social needs in ways that create shared value—a meaningful benefit for society that also adds to your company’s bottom line? Example: By addressing the AIDS pandemic in Africa, a mining company such as Anglo American would not only improve the standard of living on that continent; it would also improve the productivity of the
The Link Between Competitive Advantage and Corporate Social Responsibility
The Idea in Brief
Many firms’ corporate social responsibility (CSR) efforts are counterproductive, for two reasons: They pit business against society, when the two are actually interdependent. And they pressure companies to think of CSR in generic ways, instead of crafting social initiatives appropriate to their individual strategies. CSR can be much more than just a cost, constraint, or charitable deed. Approached strategically, it generates opportunity, innovation, and competitive advantage for corporations—while solving pressing social problems. How to practice strategic CSR? Porter and Kramer advise pioneering innovations in your offerings and operations that create distinctive value for your company and society. Take Toyota. The company’s early response to public concern about auto emissions gave rise to the hybrid-engine Prius. The Prius has not only significantly reduced pollutants; it’s given Toyota an enviable lead over rivals in hybrid technology.
The Idea in Practice
To practice strategic CSR: 1. Identify points of intersection between your company and society. • In what ways does your organization affect society? For example, do you provide safe working conditions and reasonable wages? Do your operations create environmental hazards? • How does society affect your competitiveness? For instance, do countries where you operate protect intellectual property? Supply enough talented workers? Encourage outside investors? 2. Select social issues to address. Given your company’s and society’s impact on each other, how might you address social needs in ways that create shared value—a meaningful benefit for society that also adds to your company’s bottom line? Example: By addressing the AIDS pandemic in Africa, a mining company such as Anglo American would not only improve the standard of living on that continent; it would also improve the productivity of the