The purpose of this paper was to discover whether or not a company’s corporate social responsibility strategy added value to the company beyond the financial perspective. In addition, to find out if different perspectives and implementations of CSR gave different perceptions of what value CSR adds to the firm.
The contributions of this paper are the four fundamental components of how firms implement CSR, that CSR does add organizational value to firms, and that the value added differs according to what perspective the firm has on its social responsibility.
7.1 How Firms Implement CSR
Firms implement their corporate social responsibility strategies in a variety of ways. This paper has added to the theory by identifying four fundamental components of how firms implement CSR. The first component is corporate values, related to the environment, human rights, humanitarian causes, and employee satisfaction. The second fundamental component is CSR initiatives towards stakeholders, companies focus on all the stakeholders in the entire value chain, and are active in the CSR debate. The third component is organizational membership, where the charity effort can be divided into industry related, country related or local charities. The final component of implementing a CSR strategy is fit to core business, that companies’ CSR initiatives are consistent with and related to their core business.
7.2 CSR Adds Value
CSR adds value to the firm through a number of dimensions, as illustrated in the revised model.
1. The most prominent dimension is human resources, where CSR directly affects the firm’s ability to attract new employees, retain employees, and the employee’s level of motivation and satisfaction.
2. A second dimension for which CSR clearly adds value to the firm is operations. A social responsibility strategy positively affects the level of efficiency in the firm, the innovation, and gives certain long-term cost advantages.
3. A third important dimension affected by a firm’s CSR strategy is reputation. A well-implemented and executed CSR strategy improves the company’s reputation, and gives an enhanced brand image.
4. A fourth dimension for which CSR adds value is through the involvement and emphasis on the firm’s stakeholders.
5. A fifth dimension is that CSR can increase access to capital markets.
7.3 Three Perspectives on CSR
The perception each firm has on corporate social responsibility, as exemplified by the three CSR perspectives in the analysis, to a great extent governs the perception the firm has on what value is linked to their CSR strategy. The three perspectives are black and white, caring for each other, and the big picture. The firm’s perspective is influenced by a variety of factors, such as corporate history, its unique value chain, and its leadership. The firm’s perspective on CSR influences how they formulate their corporate values, which CSR activities they initiate, and which organizations they cooperate with.
Therefore, a contribution of this paper is the integration of organizational values and CSR implementation. By looking at the two aspects together, we learn more than by separating them. From the data there appears to be a reinforcing effect – the companies’ CSR driven values reinforce their CSR strategy and implementation, which again reinforces the values and so forth. It is the integration of the two research questions that have resulted in the three CSR perspectives.
The firm’s CSR perspective affects the extent to which the companies see a direct linkage between their CSR strategy and added value to the company. This can be illustrated as a continuum, from seeing a clear and broad linkage between CSR and value, to seeing a more unclear and narrow linkage between CSR and value.
Indirect and Weak Linkage Direct and Strong Linkage
The Big
Picture Caring for
Each Other Black and
White
Figure 13: Continuum of Linkages to Value
This paper has found that corporate social responsibility does add value to the firm in other ways than financial, yet the degree of direct linkage between CSR and value varies depending on the firm’s CSR perspective.
7.4 Implications for Companies
While some argue that the term CSR is a temporary phenomenon, the underlying principle – that the business of business is more than business – is not temporary; it is a lasting and important aspect of conducting business today. This paper has attempted investigate whether companies can do well by doing good, and whether the ways of implementing CSR influences what values they see.
The findings are that CSR does contribute to value in the company, beyond the bottom line.
This finding could perhaps induce more firms to implement CSR strategies. However, the extents to which companies see their values as CSR driven vary according to what perspective they have on CSR.
Therefore, firms wanting to focus on CSR should decide on a perspective that suits the unique characteristics of the company, implement the CSR strategy fully, and be aware of both the value and risks that being socially responsible brings. Further, the company will experience more value by making sure there is a fit between their CSR strategy and their core business.
The three case companies in this paper can be seen as pioneers in the Norwegian CSR arena, and other firms can learn from their successes and mistakes.
7.5 Directions of Future Research
Now that I have investigated successful CSR firms in order to find the organizational value driven by CSR, it would be useful to test whether the findings are found in firms without a CSR focus. For instance, one could examine Stormberg at one end of the scale, and one of Stormberg’s close competitors, perhaps Bergans, without a publicised CSR strategy, at the other end of the scale. These two companies are in the same industry, with similar value chains and similar product development, making the differentiating effect of Stormberg’s CSR strategy more visible and easier to isolate. However, when approaching companies without a clear CSR strategy, it seems they were unwilling to take part in this study as a case company. Yet, in conducting further research in this field, it would be interesting to pursue this type of research design – comparing two very similar firms, where the most notable difference is CSR.
The results found in this paper are based on three socially responsible companies. It would be interesting to see if the three CSR perspectives could be found in more companies, across industries and countries. Further, it would be interesting to investigate the reinforcing effect (that the companies’ CSR driven values reinforce their CSR strategy and implementation, which again reinforces the values) which was observed in the three case companies.
In order to better make the case that corporate social responsibility adds value to the firm, it would be interesting to conduct research that could link the organizational values found in this paper, to financial values. The challenge is in quantifying and measuring such variables.
Another interesting research aspect would be to fill the gap in the literature on ways of implementing CSR. It would be interesting to investigate further differences, and perhaps find an explanation for the connection between implementation and experienced values.
Future research in the area of CSR could support the main findings of this paper; that the four fundamental components of CSR are company values, CSR initiatives, organizational membership, and fit to core business; that CSR adds organizational value to the firm through operations, human resources, markets, reputation, and stakeholders; and most importantly, the integration, that the firm’s CSR perspective influences the values they see and the extent to which they see a direct link between their CSR strategy and values created.