Strategic Corporate Social Responsibility –Innovative Marketing Tool for

Competitive Advantage
Dr. Parul Khanna Ms. Chhavi Mathur
MBA, Ph.D Research Scholar
Assoc. Prof. & Dean R&D
Institute of Management & Technology, Faridabad Global School of Business
drparulkhanna07@gmail.com

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Abstract:

In last few years there has been a sea change in the nature of the triangular relationship between
companies, the state and society. Companies are under increasing pressure from society to take their
social responsibility. Given the irrefutable, clear and direct relationship between the social
performance of a corporation and its reputation, sales, brand and indeed overall value and as this
correlation gets stronger as both the size of the business and the value of the brand increase,
organisations large and small are scrambling to both understand Corporate Social Responsibility
(CSR) and implement programmes to improve their environmental, social and ethical performance.
CSR is the point of convergence of various initiatives aimed at ensuring socio-economic development
of the community which would be livelihood oriented as a whole in a credible and sustainable manner.
A number of factors are driving the increased adoption of CSR practices in the corporate sector. For
many companies, being a good corporate citizen is a vital aspect of their identity, values and vision.
Market forces are also propelling many firms to go ‘beyond compliance’; as a result CSR is emerging
as a ‘hard’ commercial factor, linked directly to profits and brand value.
Business today needs a stable social environment that provides a predictable climate for
investment and trade. CSR is the means by which business contributes to that stability. By
establishing and maintaining a corporate agenda which recognises social priorities and is tailored
to meet them, business displays its human face to consumers, communities and opinion leaders.
The key focus of the research paper is to appreciate the application of fundamental Marketing
principles on CSR practices. This means rigorously focusing on priorities, allocating finances for
treating CSR strategically as an investment from which tangible and intangible returns are expected.

Key Words: Corporate Social Responsibility, Strategic Approach, Competitive Advantage, Marketing
Management
Introduction:
Today, we live in an age in which companies, businesses and society are more connected and
interactive than ever before in the past. Corporations are more aware of their role towards the
society. They are responsible bodies that feel a sense duty towards commonwealth and the
environment that comes with a growing realisation that they, as an integral part of this society
themselves, can contribute to its upliftment and empower of the entire country in turn. And
consumers and citizens' campaigns can make all the difference. This is the foundation thought
behind the golden handshake between tripartite—companies, society and nation; Corporate Social
Responsibility or CSR.
In one of the recent natural disasters to hit India, Tsunami, the devastation and misery caused by
the sudden, massive inundations of the Indian Ocean touched all. The devastation was huge and
millions of people around the world spontaneously made huge donations in order to make
immediate relief possible. Not only did private individuals put their hands into their pockets, but
also many corporations and governments made donations on a very large scale. What was
remarkable is how quickly so much aid has been made available. This was the fund that brought
tsunami affected areas back on their feet. That was Corporate Social Responsibility in action. In so
many other ways one gets to see CSR in practice---environment friendly projects, constructing
schools, encouraging education--- just some of the ways that organizations are giving back to the
community, a part of their profits in a manner that the community benefits.
In comparison to individual efforts and even just government effort is not enough to bring changes
at a pace that it is actually needed. Fortunately, with the popularity of CSR, more and more
companies now perform in non-financial arenas such as human rights, business ethics,
environmental policies, corporate contributions, community development, corporate governance,
and workplace issues. Now, social and environmental performances are considered side by side
with financial performance. From local economic development concerns to international human
rights policies, companies are being held accountable for their actions and their impact. Companies
are also more transparent in disclosing and communicating their policies and practices as these
impact employees, communities, and the environment.
Making profits is about “what you do” whereas CSR is about “what you are”. If one accepts that
CSR is becoming an essential ingredient of any successful business, it stands to reason that in
future all stable and sustainable businesses will have developed strategies for managing their social
impact and will have incorporated such thinking into every level and aspect of their business.
However, even if one is armed with a complete understanding of what CSR is and truly intends to
improve CSR in their own organisation, the practical application of a lasting and effective
corporate citizenship programme is a significant undertaking that will, by definition, affect all of an
organisation’s internal and external stakeholders. Additionally, as society’s expectations of the
corporation steadily increase, “to be taken seriously, companies must be able to show that their
CSR strategy is more than good PR”.

What is CSR?
In recent years, “the corporate sector has grown in economic and social importance in the
developed world as state economic control has shrunk. Companies have become larger and more
international thereby raising new questions over their accountability and societal concerns over
corporate activities are now wider in scope and more in evidence”. Consequently, “in a world
where power has shifted from the public to the private sector, the expectations which society has in
relation to the environmental, social, and ethical responsibilities of companies have risen”. CSR has
quickly moved from a domain typically associated with anti-corporate non-governmental
organisations (NGOs) and activist campaigners into a mainstream business issue which is now “a
critical determinant of trust in companies”. With this development, CSR itself (also referred to as
corporate citizenship) has naturally taken on a number of different meanings. Although these
definitions are similar, when attempting to identify the essential components of a successful
programme for improving corporate social responsibility it is important to explore the similarities
and differences among the definitions used. To that end, some of the more common and generally
accepted definitions of CSR are as follows:
 “Corporate Social Responsibility is the term used to refer to a whole range of obligations
towards society that business organisations are expected to acknowledge and to reflect in
their actions. These include things such as fair treatment of employees, customers,
suppliers; respect for human rights; being good corporate citizens of the community in
which they operate; and conservation of the natural environment”;
 “Corporate social responsibility refers to the overall relationship of the corporation with all
of its stakeholders. These include customers, employees, communities, owners/investors,
government, suppliers and competitors”.
 CSR is described as “how business takes account of its economic, social and environmental
impacts in the way it operates – maximizing the benefits and minimizing the downsides”. In
other words, it is about taking responsibility for the impact of our business on all those who
are affected by it.
 According to World Business Council for Sustainable Development (WBCSD), CSR is “the
continuing commitment by the business to behave ethically and to contribute to economic
development while improving the quality of life of the workforce and their families as well
as local community and society at large”
In its broadest categories, CSR typically includes issues related to business ethics, community
investment, environment, governance, human rights, the marketplace and the workplace, because
all organisations have an impact on the society and the environment through their operations,
products or services, and through their interactions with key stakeholder groups including
employees, customers/clients, suppliers, investors and the local community among others. This is
demonstrated in the figure 1.

Figure 1: Areas of Corporate Social Responsibility

CSR involves addressing the legal, ethical, commercial and other expectations society has for
business, and making decisions that fairly balance the claims of all key stakeholders. Effective CSR
aims at “achieving commercial success in ways that honor ethical values and respect people,
communities, and the natural environment.” Simply put it means “what you do, how you do it, and
when and what you say.”
Corporate Social Responsibility is increasingly becoming an important aspect of corporate
behavior. Corporate contribution to society, environment and business when guided by enlightened
self-interest improves quality of life for all. Effective corporate responsibility requires a good level
of commitment from the entire organisation and especially the top management who can ensure
that not is CSR practiced but also practiced well.

Importance of Corporate Social Responsibility

Every business needs to recognise the impact of its operations on the world. The way they do
business dictates the footprint they leave behind. If they take the time to “maximise the benefits and
minimise the downsides” then they can help to create a better world.
Corporate social responsibility in business isn’t just a do-gooders’ charter or latest example of
regulatory overdrive. It is about creating sustainable businesses through the best possible
relationships with their communities and stakeholders.
The expectations of the traditional stakeholders – shareholders, customers, and employees are
increasing and so, too, is the list of groups wanting to know how an organisation is run.
As a result, more and more companies are working harder not only to make a positive impact on
society and the environment through their operations, products or services, but also to demonstrate
it to these groups.
A comprehensive set of policies, practices and programmes incorporated throughout a business can
increase productivity, contribute to competitiveness, improve staff recruitment and retention rates
and create a more positive corporate image.
Unfortunately, many companies only use the responsible business approach as a risk management
tool. This limits the benefits that could be achieved through focusing on opportunity rather than
risk. Socially responsible business is not about restricting business growth; it’s about creating new
opportunities, the better way of doing business.
According to a world Economic Forum Survey of CEO’s and leaders (Voice of Leaders survey),
corporate brand reputation outranks financial performance as the most important measure of
success. Companies with public commitment to ethics perform better on 3 out 4 financial measures.
On an average, CSR-oriented companies also have 18% higher profits. If corporations of
innovation and competitive advantage consider CSR using the same frameworks that guide their
core business choices, they would discover that CSR returns can be potent source of innovation and
competitive advantages. The task is to apply business principles and practices to make CSR
sharper, smarter and focused on what really matters. The corporate sector is sated with examples of
companies where CSR practices have not only established them as credible enterprise but also
brought them business benefits in terms of cost savings, reducing risk, increasing revenues,
building reputation, developing human capital improving access to capital among others.
A greater need for CSR in India has brought companies who initiate and participate in CSR
activities into the limelight and increased public expectations of them, according to the Nielsen
India Corporate Image Monitor 2008, a study designed to measure people’s perceptions of the
image and reputation of India’s leading companies.
“Public expectations of Corporations are on the increase as stakeholders see the significant impact
they are having in various spheres, be it education, health infrastructure, environment conservation,
etc. The public’s confidence in organizations undertaking socially beneficial projects is greater than
their confidence in other channels that try to bring about positive social change,” said Vatsala Pant,
Associate Director, Consumer Research, The Nielsen Company.
CSR is an effective way of building goodwill for a company. More than 50 percent of respondents
felt that Corporates are honest towards their CSR activities. But the motive behind these activities
is seen to be many, ranging from economic and tax benefits (47%), to enhance corporate reputation
(45%), or to build a competitive advantage (30%), etc. 28 percent of respondents thought that
Charity, either directly or via NGOs is the best way to demonstrate social responsibility. Other
ways of engaging in socially uplifting activities considered beneficial by stakeholders is a written
CSR policy (24%), actively involving employees in CSR activities (20%), and community work
and providing employment to needy groups (both 12%).
There is however a skeptical one-third of stakeholders who believes that CSR is publicity stunt for
most Corporates. “It is interesting to note that seven out of ten members of the general public are
willing to pay a premium for products and services to enable a company to fulfill its CSR
commitments. Considering the impact of CSR activities on a company’s reputation, organizations
will have to plot a developmental path for CSR integrating it with the rest of the business,”
continued Pant.

CSR in India
Indian companies are now expected to discharge their stakeholder responsibilities and societal
obligations, along with their shareholder-wealth maximisation goal. Nearly all leading corporates in
India are involved in corporate social responsibility (CSR) programmes in areas like education,
health, livelihood creation, skill development, and empowerment of weaker sections of the society.
Notable efforts have come from the Tata Group, Infosys, Bharti Enterprises, ITC Welcome group,
Indian Oil Corporation among others.
The 2010 list of Forbes Asia’s ‘48 Heroes of Philanthropy’ contains four Indians. The 2009 list also
featured four Indians. India has been named among the top ten Asian countries paying increasing
importance towards corporate social responsibility (CSR) disclosure norms. India was ranked
fourth in the list, according to social enterprise CSR Asia's Asian Sustainability Ranking (ASR),
released in October 2009.
According to a study undertaken by an industry body in June 2009, which studied the CSR
activities of 300 corporate houses, corporate India has spread its CSR activities across 20 states and
Union territories, with Maharashtra gaining the most from them. About 36 per cent of the CSR
activities are concentrated in the state, followed by about 12 per cent in Gujarat, 10 per cent in
Delhi and 9 per cent in Tamil Nadu.
The companies have on an aggregate, identified 26 different themes for their CSR initiatives. Of
these 26 schemes, community welfare tops the list, followed by education, the environment, health,
as well as rural development.
Further, according to a study by financial paper, The Economic Times, donations by listed
companies grew 8 per cent during the fiscal ended March 2009. The study of disclosures made by
companies showed that 760 companies donated US$ 170 million in FY09, up from US$ 156
million in the year-ago period. As many as 108 companies donated over US$ 216,199, up 20 per
cent over the previous year.
Although corporate India is involved in CSR activities, the central government is working on a
framework for quantifying the CSR initiatives of companies to promote them further. According to
Minister for Corporate Affairs, Mr Salman Khurshid, one of the ways to attract companies towards
CSR work is to develop a system of CSR credits, similar to the system of carbon credits which are
given to companies for green initiatives.
Moreover, in 2009, the government made it mandatory for all public sector oil companies to spend
2 per cent of their net profits on corporate social responsibility.
Besides the private sector, the government is also ensuring that the public sector companies
participate actively in CSR initiatives. The Department of Public Enterprises (DPE) has prepared
guidelines for central public sector enterprises to take up important corporate social responsibility
projects to be funded by 2-5 per cent of the company's net profits.
As per the guidelines, companies with net profit of less than US$ 22.5 million will earmark 3-5 per
cent of profit for CSR, companies with net profit of between US$ 22.5 million - US$ 112.5 million,
will utilise 2-3 per cent for CSR activities and companies with net profit of over US$ 112.5 million
will spend 0.5-2 per cent of net profits for CSR.
India Inc has joined hands to fine-tune all its activities falling under CSR. For this, it has set up a
global platform to showcase all the work done by Indian firms. Confederation of Indian Industry
(CII) and the TVS Group collaborated to form the CII-TVS Centre of Excellence for Responsive
Corporate Citizenship in 2007. It provides consultancy services and technical assistance on social
development and CSR.
According to a National Geographic survey which studied 17,000 consumers in 17 countries,
Indians are the most eco-friendly consumers in the world. India topped the Consumer Greendex,
where consumers were asked about energy use and conservation, transportation choices, food
sources, the relative use of green products versus traditional products, attitudes towards the
environment and sustainability and knowledge of environmental issues.
 • Reliance Industries and two Tata Group firms—Tata Motors and Tata Steel—are the
country's most admired companies for their corporate social responsibility initiatives,
according to a Nielsen survey released in May 2009.
• As part of its Corporate Service Corps (CSC) programme, IBM has joined hands with the
Tribal Development Department of Gujarat for a development project aimed at upliftment
of tribals in the Sasan area of Gir forest.
• The financial services sector is going green in a steady manner. With an eye on preserving
energy, companies have started easing the carbon footprint in their offices. The year 2009
witnessed initiatives including application of renewable energy technologies, moving to
paperless operations and recognition of environmental standards. Efforts by companies such
as HSBC India, Max New York Life and Standard Chartered Bank have ensured that the
green movement has kept its momentum by asking their customers to shift to e-statements
and e-receipts.
• State-owned Navratna company, Coal India Ltd (CIL) will invest US$ 67.5 million in 2010-
11 on social and environmental causes.
• Public sector aluminium company NALCO has contributed US$ 3.23 million for
development work in Orissa's Koraput district as part of its Corporate Social Responsibility
(CSR).
Conclusion
CSR is increasingly becoming an important aspect of corporate behaviour. Corporate’s contribution
to society, environment and business when guided by enlighted self-interest improves quality of
life for all. Effective CSR requires a good level of commitment from the entire organisation and
especially the top management who can ensure that not only is CSR practiced but also that it is
practiced well. CSR is perceived as an important tool for survival and it plays significant role for
the business to have strategic advantage over others. Therefore, CSR may be the deciding factor in
future, as it reflects a company’s goal, vision, mission, culture and the strategies.
References:
 Importance of Outcomes , Measurement of Corporate Social responsibility programmes –
Case Nokia, Reeta Talvitie- Siren (2009)
 White Paper- Externalities Management- Strategic Approach to Improving Corporate Social
responsibility, Hewitt Roberts (2004)
 Green Paper- Commission of European Communities (2001)
 CSR as determinant of Market Success, Sandeep K. Krishnan, Rakesh Baluchand, IIM
Ahemdabad
 Perceptions of CSR in India- An Empirical Study, Mahavir Narwal and tejinder Sharma,
Kurukshetra University
 Prabandhan: Indian Journal of Management, Volume 3, Number 8, August 2010.
 www.karmayog.com
 http://www.ibef.org/india/CSR.aspx
 www.csrindia.info
 www.google.co.in