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Monday, November 12, 2012

Strategic CSR - Definitions

The article in the url below is both stimulating, but also misguided, in its conceptualization of CSR. It is stimulating because it captures the difficulty in identifying the most responsible position on any number of complex issues:

Is it more socially responsible for U.S. businesses to protect American jobs or provide employment for impoverished people in developing countries? To shun genetically modified foods or endorse their role in ameliorating malnutrition? To power their fleets with petroleum or use electricity generated by coal? Making judgments about which position is “right” is a slippery slope, because, like fair trade and social justice, corporate social responsibility is a fuzzy, malleable, eye-of-the-beholder concept.

The article is misguided, however, in conceptualizing CSR as something that is an option that firms can choose to be “known for”:

Do you want your business to become known for its commitment to corporate social responsibility? If so, you’re going to have to be thoughtful in managing trade-offs, balancing short-term and long-term interests, and assessing possible unintended consequences. Differing audiences (or interest groups) will judge the choices you make based on their differing perspectives. Your task is to sort through the issues and determine the best course of action for your organization.

CSR is not a choice—it is the way business is conducted. For example, the author suggests that, in order to be good at CSR, a firm needs “to be thoughtful in managing trade-offs, balancing short-term and long-term interests, and assessing possible unintended consequences.” If that is not a description of how all firms conduct business, I do not know what is. Certainly, firms are either better or worse at managing these relationships; they draw the lines of key stakeholders narrowly (at shareholders alone) or more broadly (in terms of a wider group of constituents), but, in both cases, CSR is not an option, it is the way that business is conducted in the twenty-first century. Once firms understand that they are embedded in complex stakeholder relations and that they need to manage these relations effectively if they are to survive and thrive over the medium to long term in today’s global business environment, then strategic planning and daily operations represent the means to manage the messy trade-offs and priority-setting that the author refers to in the first quote, above. But, again, this approach to business is not an option, it is the reality that firms operate within—those firms that understand this will be more successful than those that do not.

Where the author returns to safer ground is in terms of the distinction he draws “between core and extraneous corporate social responsibility efforts.” This distinction is one of the key messages of Strategic CSR—the difference between “core and extraneous” actions is the difference between strategic CSR and CSR as understood by many advocates (and journalists). It is operational relevance that is key.

It is somewhat frustrating to still be running into these fundamental misunderstandings of CSR as some kind of philanthropic add-on that are propagated by the media and other commentators (and academics like Porter & Kramer with their concept of “shared value”). Combatting these perceptions and building a sound, strategy and operational basis for CSR is essential in order to begin building lasting change around common understandings of core CSR concepts.

Take care

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Corporate Social Responsibility: Distinction or Distraction?
By Steve McKee
August 9, 2012
Bloomberg Businessweek