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Understanding Strategic Corporate Social Responsibility (CSR) in Finnish Consumer Goods Industry

Case Fazer Group

Written by Anonymous

Paper category

Master Thesis

Subject

Business Administration>Marketing & Sales

Year

2015

Abstract

Master Thesis: The concept of corporate social responsibility and its role in the organization How corporate social responsibility should be implemented as a source of differentiation is not self-evident, because the term corporate social responsibility seems to have different understandings (Montiel 2008) . This chapter aims to deepen the understanding of the multi-faceted nature of corporate social responsibility. The role of corporate social responsibility in an organization depends on the company's understanding of the term corporate social responsibility, so a more in-depth review of the concept is needed at this time. Only after this is there a reason to look at the possibilities offered by corporate social responsibility as a competitive advantage. CSR is a complex phenomenon because it connects business and society (Halme, Laurila 2009). It contains a series of parts such as employee relations, human rights, corporate ethics, community relations and environmental sustainability (Moir 2001). The correct way to implement CSR is not limited to one, because different cultural, national and social backgrounds should be considered when planning CSR actions (Atle Midttun, Kristian Gautesen and Maria Gj°lberg 2006). Therefore, corporate social responsibility has been defined and dealt with one of the narrowest viewpoints. The neoclassical corporate social responsibility viewpoint proposes that the only social responsibility includes providing employment and paying taxes (Moir 2001). This view of CSR reminds people of Nobel Prize winner Milton Friedman (Milton Friedman, 1962) and his famous statement on corporate social responsibility. Friedman simplified the company's social responsibility, pointing out that the only responsibility of the company is to earn as much profit as possible for its shareholders within the scope of laws and regulations (Friedman 1962, 133). It has been raised that he is worried about the improper use of shareholder funds because he does not believe that managers really have the proper ability to solve social problems. Social issues are seen as the responsibility of politicians and civil society, not the responsibility of companies. (Lee 2008). 2.3.2 Strategic CSR as a source of competitive advantage Strategic CSR is the only way to create a win-win situation for the company, stakeholders and society. Investing in corporate social responsibility is not only humanitarian or ethical, but also profitable. Generally speaking, when aiming to improve competitiveness through CSR, there are two schools of thought in business strategy: the resource-based view (RBV) strategy and the positioning school (PS) of Michael Porter (1985). The RBV strategy focuses on internal capabilities that have an impact on the company's competitiveness. On the contrary, the positioning school emphasizes the importance of clear business strategy and operational effectiveness, as well as a series of different activities (Porter 1985). The premise of PS is better adapted to the ever-changing business environment, which requires continuous redefinition of strategy and innovation. It is said that in modern times, relying solely on internal resources is not a flexible point of view. (Nwagbara, Reid 2013) The theoretical part of this paper is also constructed based on Porter's strategic principles and viewpoints. Baron (2001) and McWilliams and Siegel (2001) are considered the first researchers to theorize CSR for profit maximization (Siegel, Vitaliano 2007). Considering these publication years, it is worth noting that the research on strategic corporate social responsibility is still in its infancy. Baron emphasized the importance of linking product sales to social causes (Baron 2001). For example, a consumer chooses a company's products because he/she wants to support the social impact the company promises. Therefore, CSR is a reason (or at least one of the main reasons) to buy a product, and in this sense, it is beneficial to the company. CSR product differentiation has even proven to be a more effective strategy than product quality differentiation, for example in the context of predicting export performance (Boehe, Barin Cruz 2010). Read Less