Presentation by

Christopher
Business Strategy
UMSDQ5-15-3
Lipp

Lecturer
International
Business

Study Unit 8
Strategy and Responsibility 2
CSR / CSV

Code:
This Week Preparation
Strategy and Responsibility 2

Mandatory preparation for seminars:

Lecture recording: Main lecture, and lecture chunks (“In details”)

Read and take notes:

Porter, M. E., & Kramer, M. R. (2006). “Strategy and society: The
link between competitive advantage and corporate social
responsibility”, Harvard Business Review

Case study:
Esquel Part 2
The context
So far, the question we asked
 Where does competitive
advantage come from?
Competitive Strategy:
Looking from the
perspective of the firm
Study Units 1; 2; 3; 4; 5; 6
Strategy as a Choice
RBV and Competencies
Strategy and Innovation
Now, the questions we ask are
 What is the responsibility of
a firm?
 How does that impact how
we should look at strategy?
Corporate Strategy:
Looking from the
perspective of society
Study Units 7; 8
Strategy and Responsibility
L e ve l’
er
‘High
 An Effective Society
Does society work more effectively if…… e.g. fir
ms
Shareholder View Stakeholder View

Different institutions (e.g. Different institutions

firms) focus on their role
within framework of
Or
applicable laws and
expectations
voluntarily choose where
to apply themselves -
pushed to effectiveness by
the mechanism of the
market

How societies address social issues will be a mixture of the two

reflecting the prevailing ‘variety of capitalism’
Corporate Social Responsibility No a
so w greed d
e
alte ide rang finition
rnat ,
ives e of sim
! ilar
CSR refers to the practice and policy of companies,
who integrate social and environmental concerns in
their business operations and in their interactions with
their stakeholders on a voluntary basis.
Bruntland Commission
Report (1987)
Remember:

CSR initiatives reflect voluntary choices and are

beyond what the firm is required/needs to do to
successfully attract customers and deliver long term
value to its shareholders
 CSR approaches have had little impact
“A hodgepodge (=“mixture”) of uncoordinated CSR and philanthropic
activities that neither makes any meaningful social impact nor
strengthens the firm’s long term competitiveness” (p.83)

• Approaches pit economic against social

value

• Often seen as a cost or simply marketing

to protect firm’s reputation and ability to
trade Glossy
CSR
s
• Or a personal response by managers (… Report
depends on managers!) in
d e r m odel
o l
Elkington coined the phrase ‘triple bottom line’ but Shareh
e?
now feels it hasn’t changed anything! disguis

 Results often “cosmetic, reactive and fragmented”

Source: Porter & Kramer (2006) CSR = C-We-R (=“see, we are a good company”)
 Focus on Creating Shared Value
CHOOSE!!
(What not to do)

Sweet Spot of Sustainability Strategy:

• Need a far more strategic approach with focus

where firms have the most salience and impact (Porter!)
=knowledge, competencies

• Identify points of intersection between economic and social

value to deliver “Shared Value”

• Focus on small number of initiatives that generate

significant shared value by application of firm’s
competencies
 Credibility, Impact, Sustainability
Porter and Krammer (2006), Unruh (2013), Webb (2014)
 How should the firm act?
Generic Social Value Chain Social Dimensions
Impacts Impacts of Competitive
Context
Issues that firm VC activities
CSR
X
E Issues that affect the
SIV nly) are making worse:

I
O N future competitiveness of
RESP l value o
F
 Reduce harm from
the firm: firm must get
ia
( s oc
value chain activities
(negative economic value) involved
 Leverage capabilities
Issues not directly related to improve key areas of
to firm’s competitiveness

Y
Issues that can be resolved

S T
competitive context

E
or value chain activities: by firm’s current value
L
 Be a goodP
V
chain activities:

Mwith lawsP
citizen

IN
 Transform value-chain CSR
O
= Comply
T O cost
C unnecessary activities to benefit society AT E C
GI ue)
STR red vaeclonomic
= Stop
r S while reinforcing strategy
(sha social +
o (positive economic value)

Porter and Kramer (2006)

Choosing where to focus available resources
 Catergorisation will vary by Industry
Generic Social Value Chain Social
Impacts Impacts Dimensions of
Competitive
Context

Walmart Glaxo Anglo American

Esquel SmithKline

American Walmart Toyota

Express Netflix Jet Blue

Shell Coca-Cola
McDonalds
Canon Nestle

These firms may be wasting These firms have a responsibility The existence of these firms is
resources by trying to solve to act on these social issues threatened by these social issues
these social issues
Based on Porter and Kramer (2006)
 Soc
wh iety b
o e
eac le bec nefits
wh h focu ause as a
e f
mo re the sing o irms a
st i n
mp y can issue re
Remember: act hav
e th
s
e

You are making a strategic choice of

where to focus so as to have the most
impact and such that the involvement
is sustained over time
Other issues are not seen as unimportant
instead they are left to others for whom they
are strategic.
Strategy and Responsibility 2:
CSR
Seminar Template

ESQUEL part 2
1. Using Porter & Kramer’s (2006) framework, analyse
Esquel’s E-Culture and the decisions that generated social
value it triggered. Provide evidence to support your
argument.

2. Using the template slides, evaluate how well Esquel

have followed Porter &Kramer’s advice on CSV (Creating
Shared Value).

3. Critically assess whether this advice is appropriate. How

do you believe Margie Yang and her team would respond
to a challenge that Esquel needs to be more focused in
its CSR agenda
Consider the CSR initiatives that Esquel
is engaged in and fill in the table below.

Identifying Initiatives
It is best to first list them, then think
about categorising them.

Make sure SDCC issues are

fundamental to the firm’s future
competitive landscape 3. Looking at each initiative,
2. How does it deliver is issue addressed Value
1. List CSR initiatives
significant economic benefit Chain (inside out), Social
Esquel is voluntarily
as well a social value to Dimensions of the
pursuing – i.e. activities
Esquel - or is it mainly a cost Competitive Context
that deliver social value
(outside in) or Generic?

CSR Initiative/Issue Impact on Economic Value P-K Category

A. Donations to disaster-struck area A. No economic value A. Generic Social
(Sri Lanka and Malaysia) issue
B. …
C. …

Always justify your responses!

Use the categorisation on this slide
to map initiatives into Porter and
Kramer’s framework Creating Shared Value
Generic Social Issues Value Chain Social Issues Social Dimension of the
Competitive Context
+ve SV +ve SV B
-ve EV -ve EV

A D

Responsive CSR
Strategic CSR
C

+ve SV +ve SV
+ve EV +ve EV

What does the framework suggest Esquel should do in its CSR strategy?

SV= Social value ; EV = economic value; +ve = positive ; -ve = negative

Use the categorisation on this slide
to map initiatives into Porter and
Kramer’s framework Creating Shared Value
Generic Social Issues Value Chain Social Issues Social Dimension of the
Competitive Context
+ve SV +ve SV B
-ve EV -ve EV

A D
C
Responsive CSR
Strategic CSR
D

+ve SV +ve SV
+ve EV +ve EV

What does the framework suggest Esquel should do in its CSR strategy?

SV= Social value ; EV = economic value; +ve = positive ; -ve = negative

Use the categorisation on this slide
to map initiatives into Porter and
Kramer’s framework Creating Shared Value
Generic Social Issues Value Chain Social Issues Social Dimension of the
Competitive Context
+ve SV +ve SV
-ve EV -ve EV
C
E
B D
Responsive CSR
Strategic CSR

+ve SV +ve SV
+ve EV +ve EV

What does the framework suggest Esquel should do in its CSR strategy?

SV= Social value ; EV = economic value; +ve = positive ; -ve = negative

Use the categorisation on this slide
to map initiatives into Porter and
Kramer’s framework Creating Shared Value
Generic Social Issues Value Chain Social Issues Social Dimension of the
Competitive Context
+ve SV +ve SV B
-ve EV -ve EV
D
A
C
Responsive CSR
Strategic CSR

+ve SV +ve SV
+ve EV +ve EV

What does the framework suggest Esquel should do in its CSR strategy?

SV= Social value ; EV = economic value; +ve = positive ; -ve = negative

 Discussion

Should Esquel follow the guidance suggested by Porter and

Kramer’s framework? If not why not?
 Final online test this week!
Your 4th and final online quiz will be available on

Thursday the 1st of December at 5 PM

until
Thursday the 8th of December at 5 PM

Questions may look like the following:

According to the Parenting Matrix,
Esquel should divest their Cotton
Farms because:
a. Owning the farms does not provide
a competitive advantage.
b. Owning the farm may destroy
shareholder value.
c. Owning the farm is associated to
negative social value.
All the initiatives mapped in Porter
and Kramer’s CSV framework:
a. Generate shared value
b. Generate economic value
c. Generate generate social value
d. Are a source of sustainable
competitive advantage
See you next week!