Despite the fact that back in the pre-Covid days columnists and business journalists (including yours truly) talked about the need for moral guidance in business and gave countless examples in which companies with a social responsibility policy did better in business, brand equity and recruitment of talent, we find ourselves, now; having to still explain why it is critical for a business to hold itself accountable for social responsibility and community value policies.
Corporate Social Responsibility and Stakeholder Benefits
A study on social responsibility carried out by researchers from the universities of Drexel, Pittsburgh and NYC, looked at the psychological mechanisms that explain the transfer of value to various stakeholders of a social corporate responsibility policy.
As the image below shows, this involves:
- Functional benefits
- Psychosocial benefits
All of these however are defined by the parameters imposed by social norms and expectations.
A much broader study that looked at almost fifty years’ worth of professed Corporate Social Responsibility initiatives from across the board points out that having a corporate social responsibility program means next to nothing if it is not closely linked to specific outcomes the company wants to have in terms of employee engagement, community outreach and closer integration with the market it does business in.
Indeed as the figure below makes obvious, the matrix that governs an effective Corporate Social Responsibility (CSR) program is intimately tied to the way a company sees itself (identity), how it treats its employees (human resources), what values it holds (ethics), how it communicates its needs (marketing) and how it sees the world (environmental impact).
The figure came from yet another study that examined the role and impact of having a strong corporate social responsibility initiative in a global economy.
There Is No Vacuum
The more cynical amongst us see having a corporate social responsibility program in place as a means of deflecting criticism. This is exactly the kind of checkbox marketing and, indeed, autopilot governance, we’ve had in play for virtually all of the 20th century.
In the 21st century marketplace a few things become clear:
- First, a company’s success only happens through the tacit (and sometimes, explicit) permission of its core audience. Take that away and everything else falls into the cracks and stays there until the company collapses.
- Second, marketing is communication. Communication is always a challenge. The best way to reach your audience is to hold a conversation with them. Traditional marketing is not a conversation, of course but it can be. See how, here.
- Third, a company is made up of people. Customers are also people. People do business with people. This requires two things: Being real in business and trust. Both of these are hard to achieve. They require a willingness to operate at a fundamental, human level and be willing to understand and participate in a two-way communication that reveals needs, wants and intent.
The even more cynical amongst us will think that companies that invest in corporate social responsibility initiatives are burning money that could be used to enhance their bottom line and shareholder value. This too is outmoded thinking.
Here’s a truth. Having a corporate social responsibility (CSR) program is not a magic wand. It will not automatically give your business a free pass for a bad user experience and poor customer service. It will not make your products or services better than your competitors’. It will not increase your market share if your marketing is abominable to begin with.
But here’s another truth: Companies that think they can operate in a moral vacuum where the only value they provide is measured in dollars are in for a bumpy ride.
- Bhattacharya, CB & Korschun, Daniel & Sen, Sankar. (2008). Strengthening Stakeholder–Company Relationships Through Mutually Beneficial Corporate Social Responsibility Initiatives. Journal of Business Ethics. 85. 257-272. 10.1007/s10551-008-9730-3.
- Zukauskas, Pranas & Vveinhardt, Jolita & Andriukaitienė, Regina. (2018). Corporate Social Responsibility as the Organization’s Commitment against Stakeholders. 10.5772/intechopen.70625.
- Kanji, Gopal & Chopra, Parvesh. (2010). Corporate Social Responsibility in a Global Economy. Total Quality Management & Business Excellence - TOTAL QUAL MANAG BUS EXCELL. 21. 119-143. 10.1080/14783360903549808.