Strategy and society: the link between competitive advantage and corporate social responsibility

Strategy and society: the link between competitive advantage and corporate social responsibility

Strategy and society: the link between competitive advantage and corporate social responsibility

Porter M.E. and Kramer M.R. Harvard Business Review, December 2006, Vol. 84 No. 12, Start page: 78, No. of pages: 14

Purpose – to discuss the interrelationship between business and society. Design/methodology/approach – traces the rise in interest in corporate social responsibility (CSR) and the range of methodologies available to rank companies on their CSR performance. Observes that many companies have increased their attention to CSR as a consequence of public responses to issues they had not previously considered as part of their business responsibilities. Identifies four prevailing justifications for CSR commenting that all focus on the tension between business and society, creating a generate rationale that is not tied to the strategy and operations of any specific company or the places where it operates. Argues that the mutual dependence of corporations and society implies that both business decisions and social policies must follow the principle of shared value, with choices benefiting both sides. Explains that to put these principles into practice, a company must integrate a social perspective into the core frameworks that it uses to understand competition and develop its business strategy. Considers the challenges of identifying the points of intersection; choosing which social issues to address; creating a corporate social agenda; and integrating inside-out and outside-in practices. Provides two schematic diagrams mapping the social impact of the value chain (“looking inside out”) and the social influences on competitiveness (“looking outside in”). Concludes that businesses that build focused and integrated social initiatives as part of their core strategies can make a real difference to society and achieve a sustainable competitive advantage. Originality/value – proposes a strategic approach to corporate involvement in society.

Keywords: Business performance, Competitive advantage, Corporate strategy, Social responsibility, Society