Why Care for Corporate Social Responsibility

Vikas Joshi
September 1, 2010

A recent article  in the Wall Street Journal by the University of Michigan professor Aneel Karnani builds on the premise that the business of business is business. The article, titled The Case Against Corporate Social Responsibility, makes a strong argument  that the idea (of CSR) is an illusion, and a potentially dangerous one. The idea that companies have a duty to address social ills is not just flawed, according to Professor Karnani, it also makes it more likely that we'll ignore the real solutions to these problems.

The topic of CSR is debated hotly in online media, colleges and boardrooms.There is plenty of recent literature offering insights into the interaction between CSR and strategy.Two areas stand out.

CSR and Marketing

In their MIT Sloan Review article Does it Pay to be Good?  authors Remi Trudel and June Cotte advise corporate marketers to pursue a socially responsible differentiation strategy. They point out that consumers will punish the producer of unethically produced goods to a greater extent than they will reward a company that offers ethically produced products. The negative effects of unethical behavior have a substantially greater impact on consumer willingness to pay than the positive effects of ethical behavior.

CSR and Talent Management

CSR's effectiveness as a lever for talent management is explored by Bhattacharya, Sen and Korschun in Using CSR to Win the War for Talent. They propose how business leaders can make CSR effective in attracting and managing talent. The payoff, according to the authors, is in the area of employee perception of the company. To effectively use CSR as an internal marketing lever, however, companies must make sure to:

  1. Consistently communicate CSR efforts to employees
  2. Consider employee need diversity in designing CSR initiatives
  3. Understand the psychological underpinnings of pro-company behaviors, higher productivity, longer tenures and so on
  4. Involve employees on their own terms - not by forcing CSR top-down

Whether you agree with Professor Karnani's viewpoint or not, the two concrete examples above should serve to help make a case for CSR initiatives - in a manner consistent with his premise. Do you see additional areas where the link between social responsibility and positive business outcomes can be explicitly illustrated?