Strategic Corporate Social Responsibility

Strategic corporate social responsibility is the attempt by companies to link those largely discretionary activities explicitly intended to improve some aspect of society or the natural environment with their strategies and core business activities. While corporate social responsibility has historically referred to a firm's economic, legal, ethical, and discretionary responsibilities to society, strategic corporate social responsibility, in general, represents discretionary activities that form a company's community relations function or foundation, including corporate philanthropy, volunteerism, and [Page 2008]multisector collaborations. Corporate social responsibility can be compared with the mere general concept of corporate responsibility, which is a company's complete set of responsibilities to its stakeholders, societies where it operates, and the natural environment, as manifested through its operating practices.

Corporate social responsibility represents the direct efforts by a company to improve aspects of society by the firm as compared with the integral responsibilities that every firm has with respect to primary stakeholders such as employees, customers, investors, and suppliers. The use of the term strategic implies that the discretionary socially oriented activities of the firm are intended to have direct or indirect benefits for the firm—that is, to somehow help the firm achieve its strategic and economic objectives. There is a wide range of ways in which companies can use corporate social responsibility activities strategically. These ways range from helping local schools improve so that, long term, the workforce will be better educated, to improving local conditions in the community so that it will be easier to recruit and retain employees, to improving the firm's reputation among customers so that they will continue to use the company's products and services, as well as numerous other examples.

Sometimes termed enlightened self-interest, strategic corporate social responsibility initiatives are closely linked to strategic philanthropy and cause marketing. They attempt to help achieve a company's core mission and strategies by providing a socially beneficial foundation for enhanced economic value added. This benefit to the firm happens through improved reputation from the social desirability that key stakeholders, such as customers and employees, feel for being affiliated in some way with a company perceived to be more socially responsible or, more directly, through increased use of the company's products and services that are tied to donations to specific charitable organizations.

Some observers object to strategic corporate social responsibility on the grounds that the company cannot or should not both be doing moral or social good while also profiting financially. Other observers see no necessary conflict in what is called doing well and doing good, because for companies that are under increasing pressure for good short-term results, strategic corporate social responsibility represents a way for them to attempt to meet the needs of multiple stakeholders, particularly investors and societal stakeholders, including customers, employees, and investors concerned with corporate responsibility, simultaneously.

There is significant and growing evidence from a large number of research studies that companies that are more socially responsible, or more responsible in general to all their stakeholders, perform at the same level or somewhat better than less responsible companies. This empirical evidence suggests that there are no necessary trade-offs between profitability in terms of financial performance and responsibility, even explicitly socially beneficial activities. Companies with good corporate social responsibility records, according to employee and consumer surveys, may find it easier to recruit and retain employees, attract and keep new customers, and even attract investors concerned about issues of corporate responsibility, also called socially responsible or ethical investors.

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