Outline. CORP5060 Corporate Social Responsibility Dr Stefania Romano. week 9 D: Implementing CSR 2: CSR strategy. Reading.

Transcription

1 CORP5060 Corporate Social Responsibility Dr Stefania Romano week 9 D: Implementing CSR 2: CSR strategy Outline CSR strategy! Defining strategy! CSR and strategy! CSR as project management: Husted and Allan Integrating CSR into corporate strategy: Galbreath! Review for detailed reference list see CORP5060 CSR CORP5060 CSR Reading Blowfield, M and Murray, A (2014) chapter 6 Crane, A et al (eds) (2013) chapter 10 Husted, B and Allen, DB (2011) How do we build corporate social strategy? (in Crane et al, 2013) Galbreath, J (2006) Corporate social responsibility strategy: strategic options, global considerations (in Crane et al, 2013) Defining strategy! Johnson and Scholes (1999) = the direction and scope of an organization over the long term achieves advantage for the organization through its configuration of resources within a changing environment to meet the needs of markets and fulfill stakeholder expectations [ cited by Chaffey (2007:202) ]! See Galbreath (2009) for a similar synthesis! Where does CSR strategy fit? CORP5060 CSR CORP5060 CSR

2 Defining strategy! The fact is, the prevailing approaches to CSR are so fragmented and so disconnected from business and strategy as to obscure many of the greatest for companies to benefit society (Porter and Kramer, 2006:80)! What does the CSR-strategy Venn diagram look like? Mintzberg on strategy! Intention does not guarantee outcome Intended vs Realised vs Unrealised strategy Deliberate vs Emergent CSR Strategy CSR Strategy A Strategy B C CSR CORP5060 CSR CORP5060 CSR CSR and strategy! there is a widely held belief among corporate responsibility thinkers that companies should develop management approaches that establish corporate responsibility as a core driver of business performance, thereby fully aligning it with the firm s strategic operations. (Blowfield and Murray, 2041:141)! However: For many organizations, CSR has been seen as little more than an add-on to the real business of making products, providing services, and generating a profit (Crane et al, 2013:443) CSR and strategy! Existing CR tools typically don t fit well with strategy or planning so there is a stark contrast between conventional business management excellence and corporate responsibility management excellence. (Blowfield and Murray, 2014:141) strong tendency to define excellence as the production of a report about programmes and systems (ibid)! For true integration (beyond a business case mentality), CR needs to be considered on its own merits in relation to strategic planning, regardless of financial implications (ibid: 142) cf quality management CORP5060 CSR CORP5060 CSR

3 Crane et al (2013) suggest two broad approaches exist: 1. CSR strategy development and implementation is addressed on a project management basis, in order to develop a distinct CSR strategy Planning " Implementation " Evaluation (feedback loops) (Crane et al, 2013:444) 2. Integrating CSR into the firm s regular strategy-making as one cannot separate CSR from the firm s overall strategy (Galbreath, 2006:175)! However, the two approaches are not always distinct For instance, both tend to share a recognition of the division in strategic management literature of internal (eg RBV) and external (IO, markets) factors and attempt some reconciliation (eg McWilliams and Siegel, 2011; Galbreath, 2009; Husted and Allen, 2010)! Husted and Allen s approach typifies the first set, and sees alignment of social and economic responsibilities reflecting instrumental CSR theory and the business case for CSR (Crane et al, 2013:447)! They describe the process as the development and implementation of social strategy, reflecting social issues and stakeholder positions on those issues (Husted and Allen, 2010; in Crane et al, 2013:453) firms develop social action projects that acquire key resources from the environment and build on critical firm resources which, in combination, are difficult to imitate and lead to the creation of new products and services that provide additional value for current or new customers. (ibid)! 7 step model CORP5060 CSR CORP5060 CSR Analyze social issue, competitive environment, and non-market stakeholders 2. Analyze firm resources and capabilities for capitalizing on 5.Create a plan integrating issues, stakeholders, identity, resources, competitive environment, and expected outcome 6. Implement the plan 1. Analyze social issue, competitive environment, and non-market stakeholders! Identify social (in Crane et al, 2013:454) Takes the Porter and Kramer line regarding strategic CSR ie focus on causes that relate to firm s value chain ( inside-out view) and outside-in view (reflecting firm s stakeholders that have impact on competitiveness) 3. Evaluate firm identity in terms of social needs and 4. Determine the means and cost of acquiring any necessary resources and capabilities 7. Measure and evaluate performance Adapted from Crane et al (2013:448) CORP5060 CSR Porter and Kramer, 2006:88 CORP5060 CSR

4 1. Analyze social issue, competitive environment, and non-market stakeholders! Market environment (in Crane et al, 2013:453)! Three aspects are identified which are indicators of the relationship and dependence that competitors in an industry have upon suppliers and customers, and other primary stakeholders (ibid)! = key to managerial perception of for engaging in social strategy (ibid) Dynamism (degree of unpredictability) Complexity (heterogeneous or homogenous resources) Munificence (abundance or scarcity) [print] 1. Analyze social issue, competitive environment, and non-market stakeholders! Non-market environment (in Crane et al, 2013:458)! all those relationships between the firm and its stakeholders, that are not mediated by prices (ibid)! Uses Mitchell et al (1997) model of stakeholder salience, reflecting power, legitimacy, urgency! the power of stakeholders is directly related to the firm s dependence on the stakeholder for valuable resources (in Crane et al, 2013:459) Highly salient, mixed motive stakeholders represent a potential opportunity for cooperation and a potential threat to the firm (ibid) CORP5060 CSR CORP5060 CSR Analyze social issue, competitive environment, and non-market stakeholders 2. Analyze firm resources and capabilities for capitalizing on 3. Evaluate firm identity in terms of social needs and 4. Determine the means and cost of acquiring any necessary resources and capabilities! Must be genuine 5.Create a plan integrating issues, stakeholders, identity, resources, competitive commitment environment, and from expected outcome managers! Greatest risk to the firm from its social 6. Implement strategy the planis that it seen as insincere! Role of participative decision-making eg Levi-Strauss (in Crane et al, 2013:464-5) 7. Measure and evaluate performance Adapted from Crane et al (2013:448) CORP5060 CSR ! Key difference between business and social strategy is how performance is measured 1. Analyze social issue, competitive environment, and non-market stakeholders 2. Analyze firm resources and capabilities for capitalizing on 3. Evaluate firm identity in terms of social needs and 4. Determine the means and cost of acquiring any necessary resources and capabilities 5.Create a plan integrating issues, stakeholders, identity, resources, competitive environment, and expected outcome! In effect, social strategy interposes intangible performance measures between strategic behavior and financial performance and social performance! However, evaluation of social impact often neglected ie actual effectiveness of efforts (in Crane et al, 2013:467-8) 6. Implement the plan 7. Measure and evaluate performance Adapted from Crane et al (2013:448) CORP5060 CSR

5 [print] Integrating CSR strategy (Galbreath, 2006)! Offers a recognition of MNC global operations, differentiating between corporate strategy in the home country from business unit strategy in host countries May be differences in nature of host country culture, regulatory environment, NGOs! Identifies four strategic options at corporate strategy level: 1. Shareholder strategy Friedmanite ; perhaps seen as short-sighted in today s business environment (ibid: 177) 2. Altruistic strategy doing the right thing, giving back to the community, philanthropy (ibid) Integrating CSR strategy (Galbreath, 2006) 3. Reciprocal strategy enlightened self-interest seeks to resolve the conflicts between economic objectives and intense social, moral and environmental expectations of society (ibid: 178) May be tied to partnerships (eg with NGOs); cause-related marketing (ibid: 178) 4. Citizenship strategy (ibid: 178-9) Recognition of stakeholder interests but firm can t necessarily treat all stakeholders as equal (demands may be mutually exclusive) Stakeholder needs seen as integral to corporate strategy (input and output) with managing and measuring accountability to stakeholders as part of strategy Social objectives integrated with economic goals CORP5060 CSR CORP5060 CSR Integrating CSR strategy (Galbreath, 2006)! Favours 4 th option as most strategic (ibid: 183)! Galbreath also examines the impact of global standards upon CSR strategy development, recognising that global standards are instruments designed for corporate selfregulation (ibid: 182)! The extent to which home country strategy is adopted in host countries will depend on the factors identified earlier host country culture, regulatory environment, NGOs in combination with global standards firms must carefully examine the location of operation before transposing home to host CSR strategies (ibid: 183) Integrating CSR strategy summary of model (Galbreath, 2006:184) CORP5060 CSR CORP5060 CSR

6 From CSR strategy to management Blowfield and Murray (2014:136-8)! CR is becoming an identifiable area of management expertise (ibid:136), though placed into a variety of organizational structures Pfizer: full executive board has CR expertise Novartis: CR formally under heads of legal affairs and HR IBM: under exec VP for innovation and technology Danone: head of sustainable development and social responsibility Telefónica: standalone department reporting to head of corporate comms M&S: split between Comms and CSR director and Plan A director teams but has evolved during the life of Plan A (was under head of corporate governance) From CSR strategy to management! However, firms using an approach which integrates CR functions into operational functions is a long way from being realized in most firms (Blowfield & Murray 2014: 140)! Survey results show very mixed picture eg Melcrum (2005; cited in Blowfield and Murray, 2014:139) 56% of firms had designated CR personnel (though where they were placed varied) 30% of firms had CR managed by existing department lacking staff with CR as primary function 10% used non-departmental committees 4% outsourced CR to external consultancy CORP5060 CSR CORP5060 CSR Review! Strategic CSR is evidently closely related to the basic premise of the business case for CSR and can be linked to instrumental theories of CSR (though not exclusively)! The distinction between a project management approach and the integrative approach may be rather moot in practice but there is likely some value in maintaining the separation (at least in principle)! As we saw with the empirical evidence on the CSP-CFP relationship, assessing the outcomes from CR strategy is difficult! Consequently, CSR auditing and reports tend to be the key tools that firms rely on for both measurement/ evaluation and communication with stakeholders! Next week: social accounting and CSR reports CORP5060 CSR