csr and building local infrastructure

Jayashree Sadri and Sorab Sadri

CSR and BUILDING LOCAL INFRASTRUCTURE

Professor Jayashree Sadri

and

Dr Sorab Sadri


BASIS

The basis of this program is work done by the two authors independently and thereafter on the academic papers they co-authored with Dr R P Mohanty, Prof. Bijoy S Guha, Dr Sharukh N Tara and Prof. Praveen Dange between 2005 and 2008.


The Argument

If a corporate entity exists within society it contributes to society in one way or another.

It is argued that CSR initiatives to build local infrastructure are salutary and must be undertaken.

This is an exercise not for a normative intent but for a strategic intent since the corporate entity stands to gain thereby.


What 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 SOCIAL RESPONSIVENESS

ARCHIE CARROLL AND SOCIAL PERFORMANCE

THE SELECTIVE INTERVENTION APPROACH


CSR Definitions

“The continuing commitment by business to behave ethically and contribute to sustainable development while improving the quality of life of its workforce and their families as well as of the local community and society at large.” – Source: The World Business Council for Social Development

“The concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders, in a voluntary basis. ” – Source: European Commission

“Achieving commercial success in ways that honor ethical values and respect people, communities, and the natural environment.” – Source: Business for Social Responsibility


Two Perspectives on CSR

Moral Duty Aligned Normative Perspective focusing on the role of Business in the society ( Carroll, Wood, Freeman)

Instrumental Positive Strategic perspective focusing on CSR as a tool to gain some benefit ( Baron, McWilliams, Porter, Hart)


Questions on the Normative Perspective of CSR First, shareholders are the owners of the corporation, and

managers have no right to act on their own preferences, to make discretionary decisions or to use company’s resources to further social goals which cannot be shown to be directly related to corporate objectives.

Second, companies’ role is to produce wealth, and pursue socially responsible objectives may impair their performance in that role interfering with e cient resource ffiallocation;

Third, other organizations exist to deal with the kind of function requested by socially responsible actions, such as government, and companies and managers are not equipped to perform such role


The Advent of Strategic Perspective on CSR

The focus of Strategic CSR is on integrating CSR in core strategies of Business and take up those CSR activities which would forward the interest of business

While normative approach has its roots in the tension and friction between business and society, strategic CSR is built on harmony between the two.

Treats CSR as a strategic investment decision instead of a cost to business.


Business 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 sources

of capital Increase a company’s access to a particular

market Increase a company’s acceptance by the general

public


CSR and Business Sustainability

A Diagrammatic

Explanation of

Linkages

ORGANISATIONAL EXCELLENCE

PLANET

CORPORATE SOCIAL RESPONSIBILITY

INITIATIVES

STRATEGIC MANAGEMENT INTERVENTIONS

PROFIT

PEOPLE

HUMAN ENGINEERING

PRODUCTIVITY EXECUTION

QUALITY MANAGEMENT

BUSINESS SUSTAINABILITY

COMPETITIVE EDGE

BRAND IMAGE


How?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 objective

of corporate decisions is marketplace success, and stakeholder 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


Stakeholder Identification and Salience & Socio Cultural Context


TWO ARGUMENTS

If the firm addresses the consequences of its value chain activities on the local infrastructure positively it would likely lead to reduce cost and increase margin.

Competitive context of the firm also offers its opportunities which the firm may tap and convert into sustainable competitive advantage.


Impact of Porter’s Value Chain on Local Infrastructure


Firm Value Chain Activity Consequences on the local infrastructure

Firm Infrastructure Local institution building

Human Resources Management Education and Job Training

Safe working conditions

Health Care and other benefits

Technology Development Relations with Universities

Product safety

Raw material Conservation

Recycling

Procurement Procurement and supply chain practices

Uses of particular inputs

Utilization of the natural Resources

Inbound logistics Transportation impacts

Operations Emissions and waste disposal

Biodiversity and ecological impacts

Energy and water usages

Worker safety and labour conditions

Hazardous materials

Outbound Logistics Packaging and waste disposal

Transportation impacts

Marketing and Sales

After Sales Service Disposal of obsolete products

Handling consumables


Competitive Context and Social Influence 1. Context for Firm Strategy and Rivalry

2. Local Demand Conditions

3. Related and Supporting Industry

4. Factor input Conditions


Input Factor Conditions

• Improve education and training

• Improve local quality of life

• Improve inputs other than supply of labour:

– Quality of local research and development institutions

– Effectiveness of administrative institutions

– Quality of the physical infrastructure

– Sustainable development of natural resources


Related and Supporting Industries

• Foster the development of clusters

• Strengthen supporting industries

• Increase degree of knowledge transfer


Demand Conditions

• Increase the size of local market

• Stimulate sophistication of local customers

• Appropriateness of products standardization


CONTEXT FOR STRATEGY AND RIVALRY

• Create a more productive and transparent environment for competition

• Lobby for policy change

• Foster environment that rewards competition

• Promote improved standards on corporate governance and disclosure


Conclusions

CSR is no longer a managerial option but a strategic imperative.

Local infrastructure provides the firm with strategic CSR opportunities.

Choice of the CSR activities is critical for the success of the initiative for both the society and the firm.


CSR intervention must be woven into the fabric of corporate strategy.

Thanks For Your Time, Patience and Understanding.