Making the case for the competitive advantage of corporate social responsibility

Abstract

Purpose

Seeks to provide practitioners of management with a sense of the importance of strategically leveraging social responsibility in that it provides a sustainable competitive advantage and requires a culture that can successfully execute a combination of activities. These activities include deeply studying the forces that can shape the future of the industry and gathering intelligence about current and potential social and political issues, involvement of stakeholders, managing stakeholder expectations, decision making, incorporating the decisions into the strategic plan and tactical activities, communicating symbols to stakeholders, and ethical business behavior.

Design/methodology/approach

A review of the applied literature on practices and actual examples in the Pittsburgh area have shown that innovative responsible strategy, exceeding government requirements and considering multiple stakeholders, is a long‐term objective.

Findings

A firm must control the triple‐bottom‐line, or the environmental, societal, and economic aspects of the firm's performance, especially with the strategic aspects of the resource‐based view of the firm as its foundation. Historically, a concentration on improved operational effectiveness and overcapacity created a temporary economic advantage accompanied by increased profit and firm value. Such an advantage is short‐lived; investors may be satisfied, but competing companies will eventually mimic technological and material improvements.

Practical implications

This article describes how corporate evolution from the early 1900s where few organizations were acting in a socially responsible manner and they were criticized; it was thought that these companies were too large and had too much power. With the recent ethical disasters of Enron and WorldCom, the same criticisms are being voiced as a major flaw in American business education.

Originality/value

It would be difficult to find someone who views socially responsible behavior as a negative. However, social responsibility is not without its skeptics. The prolonged advantage of corporate social responsibility ensures sustainable economic advantage and should be a long‐term objective of any organization.

Citation

Smith, A.D. (2007), "Making the case for the competitive advantage of corporate social responsibility", Business Strategy Series, Vol. 8 No. 3, pp. 186-195. https://doi.org/10.1108/17515630710684187