Porter and Kramer re-frame the business proposition by trying to recognize that “societal needs, not just conventional economic needs, define markets, and social harms can create internal costs for firms” (Porter & Kramer, 2011).Ĭreating shared value (CSV) is a business strategy that creates a direct link between the success of the firm and the improvement of society. Michael Porter and Mark Kramer suggest that instead of CSR, wise corporations are shifting to a Creating Shared Value (CSV) model that argues that firms should address social issues by creating shared value, which is fundamentally focused on expanding the total pool of social and economic resources (Porter & Kramer, 2006 Porter & Kramer, 2011). In response to this criticism, a rather new movement emerged in an attempt to remedy this deficiency. Often, CSR is not an ingrained component of the firm’s philosophy and operations. One criticism of CSR is that it is seen as an “add on” endeavor for firms.
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For example, some consumers may specifically shop for TOMS shoes because of the firm’s Buy One, Give One model, where the consumer feels their purchase is providing a positive social impact. The belief is that having a CSR strategy provides good public relations for the firm and enhances their brand image, creating loyalty and more sales long term. On the other hand, many who practice CSR believe that CSR activities ultimately do benefit the company investors and stockholders. The logic was that company investors and stockholders took a risk when they invested in the company, and therefore the company’s first obligation is to them. He believed, as some others did, that no profits should be diverted for CSR activities. When CSR was introduced, the famous economist Milton Friedman opposed CSR on philosophical grounds. The CSR approach is not without controversy. Figure 11.3: The CSR Pyramid shown illustrates the ever-increasing responsibilities of a firm that engages in a CSR philosophy and the associated activities. Supporting the local literacy volunteers by encouraging employees to participate to help adults learn to read and write provides a social benefit. Environmental efforts in CSR might include reducing the company’s pollution or helping to clean up the plastic that washes up on beaches.
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However, CSR can take many forms, with the end result that society benefits in some way.
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Philanthropy is the simplest form of CSR, where a firm donates funds to a nonprofit organization such as the local volunteer rescue squad or the American Cancer Society. By practicing corporate social responsibility, also referred to simply as social responsibility, companies can be conscious of the kind of impact they are having on all aspects of society, including economic, social, and environmental” (Chen, 2020). 11.4 Corporate Ethics and Social Responsibility What Is Corporate Social Responsibility?Īs introduced early in this chapter, Corporate Social Responsibility (CSR) “is a self-regulating business model that helps a company be socially accountable-to itself, its stakeholders, and the public.