The Link Between Competitive Advantage And Corporate Social Responsibility

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In 2006 the Business Harvard Review published an article entitled Strategy & Society: the Link between Competitive Advantage and Corporate Social Responsibility, where the notion of Shared Value appears for the first time. The authors were two renowned professors of the Harvard Business School, Michael Porter and Mark Kramer, who held that business goals and social purposes have a strategic nexus and a mutual dependence relationship exists between them (Porter and Kramer 2006). But it was only until 2011 when the concept was fully developed in a new article called Creating Shared Value. The `social turn´ involved in the concept went beyond the classic concern of corporations on social issues, by introducing a new form on accumulation patterns …show more content…

The Corporate Social Responsibility strands: `social and environmental issues are a problem´
Since mid 70´s CSR was consolidated as a strategic policy for many companies in order to deal with societal pressures, risks and negative externalities (Kramer and Cania 2006; Carroll and Shabana 2010). On its classic meaning, CSR compromise a set of social and environmental actions that `… goes beyond the interests of the firm and that which is required by law´ (McWilliams et al. 2006: 1). Effectively, firms shift from a passive role to an active role by promoting communitarian welfare and environmental positive actions.
The main change introduced by CSR approach has to do with the understanding of the context as a constitutive element of economic activity success, affecting the costs and profits of the firms. Two complementary perspectives can be identified: the Stakeholders approach and the Competitive Advantage approach. For the former, stakeholders built an `organic´ relationship with the firm, becoming central players for business performance in the sense that `… can influence firms outcomes´ (Ibid: 3) and affect or be affected by corporate actions (Garriga and Mele 2013: 80). Regarding the competitive advantage approach, CSR policies become a mechanism of differentiation of products and services of the firms; hence, social and environmental initiatives are perceived as strategic investments in the mid and long term (McWilliams et al. 2006; Husted and Halen, …show more content…

In practical terms, the CSR initiatives are translated in models such as the `bottom of the pyramid´ (Prahalad 2000) and fair trade strategies, where the company adopts an active role in the socio-economic development of marginalized sectors, promoting profitable businesses as well as green brands or environmental certifications.
1.3. The shared Value strands: `social and environmental issues as a business opportunity´
The idea that business goals and socio-environmental progress must converge is at the heart of the shared value strategies (Porter and Kramer 2011). Competitiveness is linked, necessarily, with the level of legitimacy of business in society. According to Porter and Kramer, the moral dimension of business must be recovered: `Not all profit is equal… Profits involving a social purpose represent a higher form of capitalism´ (Ibid: 75). Shared value approach reaches a strategic position within larger transnational corporations, producing structural transformations in productive cycles as well as substantial changes in their value propositions. What is the rationale behind shared value

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