Analyzing the reports about business strategies in the Western European companies and North American companies, one can name some CSR-related intangible effects. These contribute in creating competitive advantages, hence switching to tangible effects (Carpenter, Bauer, & Erdogan, 2009).
Improve company’s reputation and brand’s visibility. An organizational performance in the field of CSR can help building a good reputation for the company. At the same time poor performances influence negatively the value of the brand. A big number of companies observed that CSR-related activities help in building a better relationship with stakeholders and proved to be useful in attracting efficient employees. CSR represents a part of brand visibility for some companies. It often helps them to easily penetrate new markets.
Gaining and maintaining a social license for the operations. Activities associated with social responsibility help companies earn some sort of “social license” that permits them to run. Companies that seek new natural resources usually seek this kind of benefit. Failing in obtaining the support of the community or, even worse, attracting the negative reaction from the NGOs could increase the costs for the company.
Create or improve the reputation among investor and financial institutions. The international community of investors uses factors such as social and environmental performances to evaluate investment opportunities of a certain company. Social and environmental performances represent important indicators for three of the vectors of future profitability: agility or the company adaptability, sustainability of competitive advantages and strategic management quality. Apart from institutional investors, private investors also make their decisions based on social and environmental criteria. Many companies believe that the best CSR practices can create many opportunities in term of access to capital and other funding resources.
Reduce business risk. Risk management has become essential for the business’ success. Companies began understanding that investing time and resources to meet stakeholders’ expectations and can cut business’s risk. For example, Canadian Pacific Railway (CPR) engaged local communities in the process of solving the disputes related to the proximity of residential and commercial neighborhoods to the existent railways. Therefore, CPR avoided a possible legal action by recognizing the power of communities and municipalities.
Increase employees’ motivation and productivity. Many companies reported that their CSR programs increased the employees’ moral and their motivation to work. This led to a productivity growth.
Attracting and keeping the employees. Strong empirical arguments prove that firms with strong social responsibility programs and good reputation have a better chance to recruit and keep competitive employees. A World Resources Institute (WRI) and Initiative for Social Innovation through Business (ISIB) study revealed that MBA programs graduates consider also corporate evaluation criteria when picking a working place, besides salary’s level and responsibilities. CSR is a criterion with an increasing importance in taking decisions when choosing a working place.
Competitive advantage on access to resources. A good tradition in social and environmental performances management and a demonstrated wish to cooperate with stakeholders can increase the success rate in competition with other firms for the access to resources, such as energy, minerals and forest. Companies with good reputation have more opportunities in terms of access to these resources.
Access on new markets. CSR investments enables companies to reach new markets, increase clients’ loyalty, help increase the activity on new markets. People have consideration towards socially responsible companies.
Satisfy stakeholders’ expectations. Stakeholders’ expectations about a company change all the time. They want to get involved in setting goals for social and environmental programs, not only to be informed about the organization’s activities and its performance. Involving stakeholders into company’s activities has helped oil and gas firms to earn legitimacy in the communities they run their operations.
Cost reduction. CSR-related activities can help a company to cut its costs, especially environment protection programs (e.g. reducing energy consumption or recycling).
Improve relationship with the stakeholders. CSR programs help companies to improve the relationships with stakeholders. When firms are available to listen to stakeholder’s concerns and want to cooperate with them, is created an indispensable trust between the two sides. Stakeholders’ trust in a company helps solving disputes and divergences.
Stimulates innovation and generates ideas. Employees satisfied with their jobs become more creative and dedicated to find solutions to solve the problems that they meet.
Better relationships with regulatory bodies. Companies can develop better relationships with the regulators and this leads to a less harsh monitoring. Some countries already began to value socially and environmentally responsible companies. Often regulators offer to these companies a preferential emergency treatment for when they need other governmental approvals.
Carpenter, M., Bauer, T., & Erdogan, B. (2009). Chapter 6, Section 5, “Integrating Goals and Objectives with Corporate Social Responsibility”. In “Principles of Management”. Flat World Knowledge, Inc.
Categories: Features & Analysis