12

Chapter 12
Strategizing
chapter

with Corporate
Social
Responsibility

Global
Global Strategy
Strategy
Mike W. Peng
Mike W. Peng

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 A Stakeholder View of the Firm
A stakeholder is any group or individual who can affect
or is affected by the achievement of the organizations
objectives
Goal for CSR is global sustainability, defined as the
ability to meet the needs of the present without
compromising the ability of future generations to meet
their needs
Three drivers related to urgency of sustainability
Rising population, poverty, and inequity
NGOs and other civil society stakeholders have begun monitoring and in
some cases enforcing social and environmental standards
Industrialization and its effects on the environment
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 A Stakeholder View of the Firm (contd)

Primary and secondary stakeholder groups

Primary stakeholder groups are those on whom the
firm relies for survival and prosperity
Secondary stakeholder groups are defined as those
who influence or affect, or are influenced or affected
by, the corporation, but they are not engaged in
transactions with the corporation and are not
essential for its survival

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 A Stakeholder View of the Firm

Source: Adapted from T. Donaldson & L. Preston, 1995, The stakeholder theory of the corporation:
Concepts, evidence, and implications (p. 69), Academy of Management Review, 20: 6591.

Figure 12.1
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 Managers: A Unique Group of
Stakeholders
The free market and CSR camps agree:
Not to rock the capitalistic boat
On the central role of managers
Managers, as a stakeholder group, are uniquely
positioned at the center of all stakeholder
relationships; therefore, it is important to
understand how they make decisions
concerning CSR

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 A Comprehensive Model
of Corporate Social
Responsibility

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duplicated, or posted to a publicly accessible website, in whole or in part. Figure 12.2
 Rivalry Among Competitors
Mutual Interdependence
Reliance on old ways of doing business allows competitors to
resist higher CSR standards

Threat of Potential Entry

First mover experience in pollution control technologies
can create entry barriers
pollution prevention vs. pollution reduction technologies
The technologies creating the most effective entry barriers are
proactive, pollution prevention technologies.

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 Bargaining Power of Suppliers / Buyers
If socially and environmentally conscious
suppliers provide unique, differentiated products
with few or no substitutes, their bargaining
power is likely to be substantial
CSR conscious buyers can extract concessions
Individual buyers: Shells North Sea platform fiasco
Corporate buyers: Nike requires its suppliers to be
sweatshop-free
Buyers in great difficulties can extract CSR
concessions
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 Threat of Substitutes

If substitutes are superior to existing products

and costs are reasonable, they attract more
customers
Wind power, much more environmentally friendly
than fossil-fuels and safer than nuclear power, may
have great potential
Overall, the threat of substitutes requires firms to
vigilantly scan the larger environment, instead of
narrowly focusing on the focal industry

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 Turning Threats to Opportunities

Not all industries are equal nor are any

industries immune in terms of their exposure to
CSR challenges
Industries and firms may want to selectively but
proactively turn threats into opportunities
Treating CSR as a cost or nuisance may
underestimate strategic business opportunities
The most proactive managers are far-sighted to make
their firms CSR activities a source of differentiation as
opposed to an additional cost

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 Resource-Based Considerations

Value: Some CSR policies may not add to the

firms value
Rarity: CSR policies may not pay off if common
Imitability: CSR that is embedded in people is
harder to imitate
Organization: A firm needs to tie together CSR
activities

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 CSR Economic Performance Puzzle

Why is there no conclusive evidence on a direct,

positive link between CSR and economic
performance?
Various studies produce different results
Not every firm benefits from CSR

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 Institution-Based Considerations
Reactive strategy: Many cost-conscious manufacturers
ignore CSR
Defensive strategy: Argue against costs
Accommodative strategy: CSR as a worthwhile endeavor
Proactive strategy: Actively participate in policy
discussions, build alliances with stakeholders and
voluntarily go beyond what the regulations require
Making strategic choices: A strategic menu of choices
among reactive, defensive, accommodative, and
proactive strategies

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 CSR STRATEGY

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 Conclusion
Three golden rules about managing CSR

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