Jayashree Sadri and Sorab SadriCSR and BUILDING LOCALINFRASTRUCTUREProfessor Jayashree SadriandDr Sorab Sadri
Jayashree Sadri and Sorab SadriBASIS The basis of this program is work done by thetwo authors independently and thereafter onthe academic papers they co-authored withDr R P Mohanty, Prof. Bijoy S Guha, DrSharukh N Tara and Prof. Praveen Dangebetween 2005 and 2008.
Jayashree Sadri and Sorab SadriThe Argument If a corporate entity exists within society itcontributes to society in one way or another. It is argued that CSR initiatives to build localinfrastructure are salutary and must beundertaken. This is an exercise not for a normative intentbut for a strategic intent since the corporateentity stands to gain thereby.
Jayashree Sadri and Sorab SadriWhat is CSR ?Some Perspectives ANDREW CARNEGIE AND THE GOSPEL OF WEALTH MILTON FRIEDMAN AND HONEST PROFIT KEITH DAVIS AND ENLIGHTENED SELF INTEREST ROBERT ACKERMAN AND CORPORATE SOCIALRESPONSIVENESS ARCHIE CARROLL AND SOCIAL PERFORMANCE THE SELECTIVE INTERVENTIONAPPROACH
Jayashree Sadri and Sorab SadriCSR Definitions “The continuing commitment by business to behave ethicallyand contribute to sustainable development while improving thequality of life of its workforce and their families as well as ofthe local community and society at large.” – Source: The WorldBusiness Council for Social Development “The concept whereby companies integrate social andenvironmental concerns in their business operations and intheir interaction with their stakeholders, in a voluntary basis. ”– Source: European Commission “Achieving commercial success in ways that honor ethicalvalues and respect people, communities, and the naturalenvironment.” – Source: Business for Social Responsibility
Jayashree Sadri and Sorab SadriTwo Perspectives on CSR Moral Duty Aligned Normative Perspectivefocusing on the role of Business in the society( Carroll, Wood, Freeman) Instrumental Positive Strategic perspectivefocusing on CSR as a tool to gain somebenefit ( Baron, McWilliams, Porter, Hart)
Jayashree Sadri and Sorab SadriQuestions on the Normative Perspective of CSR First, shareholders are the owners of the corporation, andmanagers have no right to act on their own preferences,to make discretionary decisions or to use company’sresources to further social goals which cannot be shownto be directly related to corporate objectives. Second, companies’ role is to produce wealth, and pursuesocially responsible objectives may impair theirperformance in that role interfering with e cient resourceﬃallocation; Third, other organizations exist to deal with the kind offunction requested by socially responsible actions, suchas government, and companies and managers are notequipped to perform such role
Jayashree Sadri and Sorab SadriThe Advent of Strategic Perspective onCSR The focus of Strategic CSR is on integrating CSR in corestrategies of Business and take up those CSR activitieswhich would forward the interest of business While normative approach has its roots in the tensionand friction between business and society, strategic CSRis built on harmony between the two. Treats CSR as a strategic investment decision instead ofa cost to business.
Jayashree Sadri and Sorab SadriBusiness Benefits of CSR Protect the intangible asset of a company Build and maintain consumers’ and stakeholders’trust Reduce transaction costs Improve company’s access to alternative sourcesof capital Increase a company’s access to a particularmarket Increase a company’s acceptance by the generalpublic
Jayashree Sadri and Sorab SadriCSR and Business Sustainability A DiagrammaticExplanation ofLinkages ORGANISATIONALEXCELLENCEPLANETCORPORATE SOCIAL RESPONSIBILITYINITIATIVESSTRATEGIC MANAGEMENT INTERVENTIONSPROFITPEOPLEHUMANENGINEERINGPRODUCTIVITYEXECUTIONQUALITYMANAGEMENTBUSINESS SUSTAINABILITYCOMPETITIVEEDGEBRAND IMAGE
Jayashree Sadri and Sorab SadriHow?The Tools For Strategic CSR The Stakeholder Theory Donaldson and Preston (2006) Descriptive Instrumental Normative Jawahar and McLaughlin (2001) “fundamental assumption is that the ultimate objectiveof corporate decisions is marketplace success, andstakeholder management is a means to that end.” Michell et al Theory of stakeholder identification and salience Porter’s Value Chain Social Influence in Competitive Context
Jayashree Sadri and Sorab SadriStakeholder Identification and Salience &Socio Cultural Context
Jayashree Sadri and Sorab SadriTWO ARGUMENTS If the firm addresses the consequences of itsvalue chain activities on the localinfrastructure positively it would likely lead toreduce cost and increase margin. Competitive context of the firm also offers itsopportunities which the firm may tap andconvert into sustainable competitiveadvantage.
Jayashree Sadri and Sorab SadriImpact of Porter’s Value Chain onLocal Infrastructure
Jayashree Sadri and Sorab SadriFirm Value Chain Activity Consequences on the local infrastructureFirm Infrastructure Local institution buildingHuman Resources Management Education and Job TrainingSafe working conditionsHealth Care and other benefitsTechnology Development Relations with UniversitiesProduct safetyRaw material ConservationRecyclingProcurement Procurement and supply chain practicesUses of particular inputsUtilization of the natural ResourcesInbound logistics Transportation impactsOperations Emissions and waste disposalBiodiversity and ecological impactsEnergy and water usagesWorker safety and labour conditionsHazardous materialsOutbound Logistics Packaging and waste disposalTransportation impactsMarketing and SalesAfter Sales Service Disposal of obsolete productsHandling consumables
Jayashree Sadri and Sorab SadriCompetitive Context and SocialInfluence1. Context for Firm Strategy and Rivalry2. Local Demand Conditions3. Related and Supporting Industry4. Factor input Conditions
Jayashree Sadri and Sorab SadriInput Factor Conditions• Improve education and training• Improve local quality of life• Improve inputs other than supply of labour:– Quality of local research and developmentinstitutions– Effectiveness of administrative institutions– Quality of the physical infrastructure– Sustainable development of natural resources
Jayashree Sadri and Sorab SadriRelated and Supporting Industries• Foster the development of clusters• Strengthen supporting industries• Increase degree of knowledge transfer
Jayashree Sadri and Sorab SadriDemand Conditions• Increase the size of local market• Stimulate sophistication of local customers• Appropriateness of products standardization
Jayashree Sadri and Sorab SadriCONTEXT FOR STRATEGY AND RIVALRY• Create a more productive and transparentenvironment for competition• Lobby for policy change• Foster environment that rewards competition• Promote improved standards on corporategovernance and disclosure
Jayashree Sadri and Sorab SadriConclusions CSR is no longer a managerial optionbut a strategic imperative. Local infrastructure provides the firmwith strategic CSR opportunities. Choice of the CSR activities is criticalfor the success of the initiative for boththe society and the firm.
Jayashree Sadri and Sorab SadriCSR intervention must be woven intothe fabric of corporate strategy.Thanks For Your Time,Patience and Understanding.