Corporate social responsibility: a new source of competitive advantage or a way of life?

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Abstract

The purpose of this research will be to present literature and data for identifying corporate social responsibility as a mean of competitive advantage. This research will also construct a model of which corporate social responsibility is influenced by four major components: Accountability, Transparency, Competitiveness, and Responsibility.

Table of Content

Chapter 1: Introduction6

Chapter 2: Literature Review7

Who Is a Stakeholder?7

CSR as a Business Strategy8

Social Responsibility and Investors9

Implementing CSR9

Chapter 3: Methodology11

Sample Selection11

Dependent and Independent Variables11

Chapter 4: Conclusion12

References13

Chapter 1: Introduction

Corporate social responsibility (CSR) is an evolving concept that does not currently have a universally accepted definition. It frequently overlaps with similar terms, such as corporate sustainability, corporate sustainable development, and corporate citizenship. Whether or not or to what extent businesses must implement CSR has been a heated topic of discussion through the years, but was particularly vociferous during the debate about conducting business in South Africa during the apartheid era. At the time, many corporate executives maintained that their responsibility extended only to their shareholders.

Corporate social responsibility (CSR) constitutes an economic phenomenon of significant importance. Today, firms largely determine welfare through producing goods and services for consumers, interest for investors, income for employees, and social and environmental externalities or public goods affecting broader subsets of society. Stakeholders often take account of ethical, social, and environmental firm performance, thereby changing the nature of strategic interaction between profit-maximizing firms, on one hand, and utility-maximizing individuals, on the other hand (Albino, 2009, 88).

Chapter 2: Literature Review

CSR manifests itself in some observable and measurable behaviour or output. The literature frequently refers to this dimension as corporate social or environmental performance (CSP or CEP). Second, the social or environmental performance or output of firms exceeds obligatory, legally enforced thresholds. In essence, CSR is corporate social or environmental behaviour beyond levels required by law or regulation.

Who Is a Stakeholder?

In Friedman's world, the only stakeholders a business should worry about were the owners—which in a corporate setting, are shareholders—and the only responsibility of the company was to maximize the return on the owners' investment. But by the 1980s, faced with an informed public, businesses were increasingly being reminded of the old adage “The customer is always right.” Without customers, there would be no profit to maximize, and customers now receive their information from many sources. Accordingly, many businesses have broadened their definition of stakeholders to include not just stockholders, but customers, employees, and suppliers as well. For national and multinational corporations, the stakeholder list also includes governmental agencies.

With an increasing focus on cross border trade, multinational corporations faced increased demand to adopt CSR policies detailing their approaches to human resource management practices, environmental protection, health and safety, and sustainable economical development in their foreign operations. As the urgency to respond to the challenge of global climate change has become apparent, many are convinced the scope of CSR should be expanded to include the international community (Mohr, 2001, 45).

CSR as a Business Strategy

Taken at face value, when a company establishes ...