LINK BETWEEN CSR AND COMPETITIVE ADVANTAGE:
ARE WE GETTING ANYWHERE?
By Levie Nkunika: MBA Marketing (East London Business School, University of East London. 2004) Bachelor of Social Science (Chancellor College, University of Malawi. 2001) The author is now Marketing Manager at Air Malawi Limited since May 2007 and previously worked as Marketing Officer, Lecturer and Consultant in London for over 4 years.

Undoubtedly millions of kwachas are spent every year by the private sector organisations on corporate social responsibility (CSR) activities. CSR, conventionally, has made it to the corporate agenda due to the realised shared value that the natural environment and social communities need effective protection and meaningful investment for their sustainability.

Almost everyday our tabloids are awash with well-intentioned CSR activities done by organisations. But even the road to hell is paved with good intentions. These activities are often less coordinated and disjointed to the extent that they are reduced to mere PR stunts that produce only one winner of the battle - the company - but two losers of the war - both society and the company.

This brief article therefore will attempt to provide a framework for effective and efficient strategic CSR that will endeavour to capture the wasted and lost opportunity for both society and organisations.

Corporate Social Responsibility (CSR) is a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders. In general terms, supporters of CSR have advanced three strong arguments to make their case: moral obligation, sustainability, and reputation. The moral appeal holds that companies have a duty to be good citizens and to do the right thing. It asks that its members achieve success in ways that honour ethical values and respect people, communities, and natural environment. Sustainability emphasizes environmental and community stewardship – meeting the needs of the present without compromising the ability of future generations to meet their own needs. Reputation is used by many companies to justify CSR activities on the basis that they will improve the image, strengthen the brand, improve staff morale and even raise the value of its stock.

Obviously emerging from the CSR justifications is a generic rationale that is not tied to the company strategy and its attendant operations. As a result companies are not adequately assisted in identifying, prioritizing and addressing social issues that matter most or the ones on which they can make the most impact. In consequence, neither meaningful and sustainable social impact nor strengthened firm’s long term competitiveness is attained. In the process a golden opportunity goes begging.

The interdependence of a company and society can be analysed with the same tools used to analyse competitive advantage and develop strategy. Rather than just acting on well-intentioned impulses or reacting to outside pressure, the organisation can set an affirmative CSR agenda that produces maximum social benefit as well as gains for the business.

Micheal Porter and Mark Krumer, renowned business strategy gurus, developed a framework that can be used to develop a comprehensive affirmative CSR agenda. They called this a ‘Prioritizing Social Issues’ framework.

The framework has three levels: Generic Social Issues, Value Chain Social Impacts, and Social Dimensions of Competitive Context. Generic social issues may be vital to society but are not significantly affected by a company’s operations nor materially affect its long-term competitiveness e.g. a local football team appealing for funds.

Value chain social impacts are those that are significantly affected by the company activities in the ordinary course of business e.g. pollution for most manufacturers.

Social dimensions of competitive context are factors in the external environment that significantly affect the underlying drivers of competitiveness in those places where the company operates e.g. shortage of skilled labour.

Credit Agricole, France’s largest bank, has differentiated by proving specialised financial products related to the environment, such as financing packages for energy-saving home improvements. Microsoft has invested over $50 million over a 5 year period in US colleges for the development of IT professionals following an acute shortage. From the two examples it is apparent that the initiatives undertaken are benefiting many communities while having a direct and potentially important impact on the respective company.

In Malawi one single most important strategic CSR, arguably, is the creation of Institute of Bankers in Malawi. This undoubtedly will not only benefit the Malawian society, but also Malawian banks as they will be getting qualified staff at reasonably lower costs thereby, to an extent, gaining a competitive edge over others( foreign).

It can be argued from the foregoing that the more closely tied a social issue is to the company’s business, the greater the opportunity to leverage the company’s resources and benefit society.

In a nutshell, the critical litmus test that should guide CSR is not sentimentalism of worthiness of the cause, but whether it presents an opportunity to create shared value – that is, a meaningful benefit for society that is also valuable to the business.

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