1. The document discusses how CSR can provide competitive advantages when integrated strategically into a company's core business operations and philosophy. It addresses how CSR can create value by addressing social and environmental issues in a way that benefits both society and the company's bottom line. 2. It also discusses CSR communication and the importance of communicating CSR initiatives and impacts internally to employees and externally to customers and communities. Key areas of CSR disclosure include environmental, community, human resources, and product/customer impacts. 3. Challenges with CSR communication include minimizing stakeholder skepticism and convincingly communicating the intrinsic motives behind a company's CSR activities.

1. LECTURE 5: INNOVATIVE CSR

2. Introduction
• CSR and Competitive advantage
• CSR and Value Creation
• CSR Communication

3. CSR and Competitive Advantage
 CSR should not be seen from a short sighted viewpoint of philanthropy or
charity.
 Companies can remain sustainable if CSR is used as a strategic tool by
absorbing it in the business philosophy and integrating it to the core of the
business.
 Progressive organizations have learnt that what is good for community
and environment is also good for business.

4. CSR and Competitive Advantage
 The key components of CSR should include workplace and labor
relations, supply chain, customers, environment and community.
 The concept of CSR as a competitive advantage will be a differentiating
factor for future business leaders.
 To get the benefit of the concept ‘CSR as competitive advantage’,
companies need to be inward looking.
 They must analyze their business processes and identify the right
opportunity for creation of competitive advantage.

5. Strategic CSR and Competitive Advantage
 Michael Porter and Mark Kramer's argue that ‘while
CSR depends on being a good corporate citizen and
addressing every social harm the business creates,
strategic CSR is far more selective’.
 They give three areas where they think competitive
advantage may lie in strategic CSR;

6. Strategic CSR and Competitive Advantage
 First, identify points of intersection between company
and society.
 Second, select specific social issues to address social
needs in ways that create shared value - a meaningful
benefit for society that also adds to your company's
bottom line.
 Third, mount a small number of initiatives that generate
large and distinctive benefits for society and your
company.

7. Strategic CSR and Competitive Advantage
Husted and Allen (2007)

8. CSR and Value Creation
 Value is created when consumers are willing to pay a premium for the
firm’s products and services based on its involvement in and position with
respect to specific social issues (Husted and Allen , 2007)
 Value creation occurs when firm resources are combined in new ways so
as to increase the potential productivity of those resources.

9. CSR and Value Creation
 Value can be created through an organization’s business model,
which takes inputs from the capitals and transforms them through
business activities and interactions to produce outputs and
outcomes that, over the short, medium and long term, create or
destroy value for the organization, its stakeholders, society and the
environment.
 Corporate social responsibility is a new approach that helps
companies to consider the interests of all stakeholders within both
the organization and society.

10. CSR and Value Creation
 There are some approaches that show how CSR plays out as modern
approach for value creation.
 The first approach is community-based development (Maskrey, 1989). This
approach focuses on local communities that companies can better work
with eg. creation of education facilities for HIV /AIDS education programs
in Africa.

11. CSR and Value Creation
 Integration of the CSR strategy for contribution into
the business strategy of a company is another
approach (Baron, 2001; Galbreath, 2006).
 This approach creates a fair trade for players of the
business field such as buyers and suppliers.

12. CSR and Value Creation
 Another approach is creating share value (CSV) (Nohria and Ghoshal,
1994). The basis of this approach is an idea that company success and
social welfare are interdependent.
 According to this approach, some factors such as healthy, educated
workforce, sustainable tangible and intangible resources and adept
government are needed to compete effectively.

13. Value Chain and Issues related to CSR

14. Ways to reap value from CSR Initiatives
According to Husted and Allan (2007) there are 3 main
ways that organizations can reap value from CSR
Initiatives;
1.Differentiate products through innovative CSR
products and processes e.g the company creates a new market for
such products with consumers who are willing to pay a price premium for
products with CSR features.
2.Build customer and stakeholder awareness of
responsible products:- visible CSR activities enhance
the firm’s reputation.

15. Ways to reap value from CSR Initiatives
3. Innovate new ways to meet social and environmental
legal requirements, industry practice and fiscal
incentives.

16. CSR Communication
 Firms normally communicate corporate social responsibility (CSR) issues
to their stakeholders in order to influence opinion leaders’ behaviours
regarding their entity (APCO, 2004).
According to Branco and Rodrigues (2006) areas covered under social
responsibility disclosures can be categorised into two broad categories:
 Internal Disclosures
 External Disclosures
 These have been further divided into four parts:

17. External Disclosures
1. Environmental disclosure.
These include :
 company’s concern for the environment
 lending and investment policies
 conservation of energy in business.

18. External Disclosures Cont.
2. Community Involvement disclosure
These include;
 Charitable donations and activities
 support for education
 sport sponsorship or recreational projects

19. Internal Disclosures Cont.
3. Human resource disclosure
This considers:
 employee health and safety
 employee training
 employee remuneration.

20. Internal Disclosures
4. Product and Customer disclosures-
These include;
 Product quality
 Customer complaints/satisfaction
 Provision for disabled customers.

22. What to communicate: Content
 There are many factors that a business can emphasise in its CSR
communication, such as its commitment to a cause, the impact it has on
the cause, why it engages in a particular social initiative (i.e. CSR
motives), and the congruity between the cause and the company’s
business (i.e. CSR fit).
 Most CSR communication typically focuses on a company’s involvement
in various social causes, rather than on the social causes themselves.

23. Challenges with CSR Communication
 How to minimize stakeholder scepticism and to convey intrinsic motives
in a company’s CSR activities is a main challenge .
 Although CEOs and government leaders insist on the fact that CSR
projects create value for the firm, privately they admit that they do not
know if CSR pays off.