Case study on Corporate Social Responsibility of MNC’s

in India
Dr. G. Muruganantham
Assistant Professor, Management Studies, National Institute of Technology,
Tiruchirappalli, India.
Abstract
In this era of global competition, declining brand differentiation, and increasing media clutter,
companies are going beyond the conventional marketing mix to increase the value of intangible
assets. Over the years there is a shift from functionally centric brands to emotionally centric -
brands to values - centric brands. Today, brands must be inspirational in a socially responsible
way to all stakeholders. To achieve the same Corporate Social Responsibility (CSR) has become
more common in business practices. CSR remains a very relevant strategic Marketing tool.
Many companies use CSR as a way to increase their image, generate brand equity, and increase
employee loyalty. The purpose of the paper is to understand the various CSR activities carried
down by select MNC’s in India and how are they integrating Corporate Social Responsibility
into their marketing strategy to build and sustain a competitive advantage.
Keywords
CSR; Marketing strategy; MNC’s in India; Brand Image; Competitive Advantage
Introduction
Corporate Social Responsibility (CSR) is defined as operating a business in a
manner that meets or exceeds the ethical, legal, commercial and public expectations that
society has of business. In the last twenty years, there has been a sea change in the
nature of the triangular relationship between companies, the state and the society
(Edenkamp, 2002). CSR has become increasingly prominent in the Indian corporate
scenario because organisations have realised that besides growing their businesses it is
also vital to build trustworthy and sustainable relationships with the community at
large. This is one of the key drivers of CSR programs (Ramya Sathish,). CSR is coming
out of the purview of ‘doing social good’ and is fast becoming a ‘business necessity’.
Corporate houses are realising that ‘what is good for workers - their community, health,
and environment is also good for the business ( Indu Jain, 2010).
Corporate social responsibility is a form of corporate self-regulation integrated
into a business model. Essentially, CSR is the deliberate inclusion of public interest into
corporate decision-making, and the honoring of a triple bottom line: people, planet,
profit. A more common approach of CSR is philanthropy.
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Another approach to CSR is to incorporate the CSR strategy directly into the
business strategy of an organization. CSR may be based within the human resources,
business development or public relations departments of an organization (Wood, 1991).
Corporate Social Responsibility is what an organization does to influence the society
positively in which it exists. The concept of CSR has been evolving for decades. CSR is a
multidimensional concept. While some take CSR as an obligation, others consider it as
a strategic tool. CSR focuses on the social, environmental and financial success of the
company. The increasing relevance of CSR in India has stemmed from the fact that a
business cannot succeed by ignoring the human and social needs of our society.
Corporations have emerged as one of the foundations of modern global society. With
this increased power has come the demand by society for social accountability,
commonly referred to as corporate social responsibility (Wilson, 2000). CSR is a
company’s activities and status related to its perceived societal or stakeholder
obligations (Brown, 2001). The concept of CSR has become more and more common in
business practices and customers today almost expect companies to be socially
responsible.
MNC’s in India
Multinational companies are the organizations or enterprises that manage
production or offer services in more than one country. And India has been the home to
a number of Multinational companies. In fact, since the financial liberalization in 1991,
the number of multinational companies in India has increased noticeably (Raj Kumar,
2008). Globalisation and development of the new market economy in the last decade
have brought the global multinationals and investment houses to India for competing in
the domestic and international markets. As many as 90 percent of the Fortune 500
companies now have explicit CSR initiatives (Kotler and Lee 2004).
In a globalised world, the role of the state is diminishing and non-state actors,
including corporations, are undertaking many functions previously performed by the
state. There is no doubt that this has created a more open and liberal business
environment, promoted competition leading to a better quality of products and
services, improved the efficiency and effectiveness of the services offered and, indeed,
given rise to profits. But corporations have to make conscious efforts to become socially
responsible, recognising that the role and functions they perform inevitably have an
impact on society. Corporate social responsibility ensures that corporations promote
corporate citizenship as part of their culture. Corporate social responsibility is about
businesses transforming their role from merely selling products and services with a
view to making profits and increasing their revenue to the development of a society
through their abilities of generating capital and investing it for social empowerment.
MNCs are working hard to create their identities, reputations and the goodwill
associated with being a good corporate citizen into their marketing initiatives in efforts
to garner sustainable competitive advantages.
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India has got a huge market potential, Labor competitiveness, Macro-economic stability.
It has also got one of the fastest growing economies in the world. Besides, the policy of
the government towards Foreign Direct Investment has also played a major role in
attracting the multinational companies in India.
Review of Literature
CSR used to be a formality. A function run in the organization for the sake of it.
Rather than with aim of creating any material difference to the society. Now, however
the scenario has changed. Due to more product categories, competition in the market
and lack of differentiation, companies are integrating CSR with marketing plan.
Companies realise that to gain customer loyalty, to make the consumer choose them
among a host of competing products, it is imperative to go with trend and project a
distinct brand/corporate image, which is of being socially responsible corporate
citizen. Due to that marketers are jumping the CSR brandwagon and branding their
products and services tagged with CSR (Krish 2010).
Adam Lindgreen, et al (2009), observed that CSR practices are more prevalent in
organizations that employ relational marketing practices. All types of CSR practices
receive positive influences by one or more types of relational marketing practices. In the
process of building and engaging in relationships, networks, and interactions with
customers and other stakeholders, managers look for CSR practices that can generate
trust, loyalty and support from stakeholders, especially as product differentiation
becomes increasingly difficult.
A survey was conducted by ORG-MARG for TERI-Europe in several cities of
India in 2001 to capture perceptions and expectations of CSR reveals that a majority of
the general public feels that companies should be held fully responsible for roles over
which they have direct control. These include providing good products and cheaper
prices, ensuring that operations are environment friendly, treating employees fairly
without any discrimination based on gender, race or religion and applying labour
standards globally. Moreover general public felt that the companies should also be held
responsible for bridging the gap between the rich and the poor, reducing human rights
abuses, solving social problems and increasing economic stability.
A firm’s CSR initiative affected both stakeholders’ overall beliefs and attitudes
toward the firm as well as their intentions to seek employment with the firm, consume
its products, and buy its stock. Individuals who were aware of the CSR initiative had
more positive company-related associations, displayed greater organizational
identification with the company and indicated a greater intent to purchase products,
seek employment, and invest in the company than respondents who were unaware of
the initiative. Therefore, CSR activity has the potential to increase not only CSR
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associations, attitudes, and identification but also the intent of stakeholders to commit
personal resources (e.g., money, labor, etc.) to the benefit of the company.
A key implication, therefore, is that to reap the positive benefits of CSR,
companies need to work harder at raising awareness levels (Sankar Sen, Bhattacharya
and Daniel Korschun, 2006). Reactions of consumers to CSR reveals its
companyfavoring
effects on an array of cognitive and affective (e.g., beliefs, attitudes,
attributions, identification) as well as behavioral (e.g., loyalty, even during
productharm
crises) outcomes. Consumers’ ability to accurately identify the CSR activities of
the firms they consume from is, in general, quite low. Awareness of the CSR initiative
to be associated with a set of four company specific outcomes - beliefs, attributions,
attitude, and identification - that are internal (i.e., pertaining to thoughts and feelings)
to consumers (Bhattacharya and Sen, 2003).
Venu Srinivasan (2007) highlighted that Corporate Social Responsibility is more
than philanthropy and must not mean ‘giving and receiving’. An effective CSR
initiative must engage the less privileged on a partnership basis. “CSR means
sustainable development of the community by being partners in their progress. The
government has been evolving a large number of welfare schemes for the people but
experience shows that in most cases the benefits do not reach the most deserving.
Industries have expertise in man management, financial management and business
planning. They can easily provide the missing ingredients of leadership and
organization and establish the ‘last mile connectivity’ to reach the benefits to the
deserving people. Therefore the focus of CSR could be ‘unlocking’ the last mile
connectivity. Industry must be a catalyst for social development. They must provide
the leadership, know-how, training, etc.
Angshuman Paul (2007), pointed out that CSR does not promote a brand and its
effect can never be visible in the profit & loss account of a company. CSR plays a role in
overall corporate objectives, as a better society means greater future market potential.
Krishna (1992) examined the attitudes of managers of large-scale enterprises towards
CSR implementation in India. Majority of the managers opined that there is a value
change in the society and industry has a dominant role in shaping the society into a
socialistic society. There is a rise in public demand for socially responsible behavior by
industry and social action programs create a favorable public image, it is in the longrun
interest of the company to get directly involved in social issues, industry has
necessary resources and talent to engage in social action programs.
Confederation of Indian Industry (2002) conducted a survey jointly with UNDP,
The British Council and PricewaterhouseCoopers (PwC) to ascertain the predominant
perceptions on CSR in India and the role that companies define for themselves in the
society. The results shows that the desire to be a good corporate citizen and improved
brand image are the main drivers of CSR among companies.
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Ilan Alon etal (2010) analysed the status of corporate social responsibility
communications in Brazil, Russia, India, and China (BRIC) nations. The four countries
are among the biggest emerging markets, forecasted to have increasing influence in
economic and political spheres.
The results of the analysis show that CSR activities differ among BRIC nations
with respect to CSR motives, processes, and stakeholder issues. China seems to be least
communicative on a number of CSR issues. Even though India's GDP per capita is
lower than that of China, its communication of CSR is more intensive. This suggests
that economic development alone cannot fully explain the differences in CSR
communication.
The role of business in society has undergone several changes. Awareness of the
impact of business on society and environment has grown along with the increasing
socio-regulatory pressures. It is no longer simple enough to employ people, make
profits and pay taxes. Companies are now expected to be responsible, accountable and
benefit the society as a whole (Brown, 2001). Business cannot escape from society and
society cannot exist without business (Davis and Frederick, 1985). Thus, there is a
twoway
relationship between business and society, Cannon (1994) holds the view that
business is expected to create wealth, supply market, generate employment, innovate
and produce a sufficient surplus to sustain its activities and improve its competitiveness
while contributing to the maintenance of community in which it operates.
The importance of all forms of global corporate social responsibility (CSR) is
evident with the increasingly widespread adoption of ISO9000 and ISO14000
management systems by global corporations. As more consumers demand that
marketers follow socially responsible practices, corporations are given an opportunity
to further exploit the newer, verifiable social accountability system, SA8000, to enhance
their reputation, differentiate their products, and build competitive advantage.
Governments, consumer groups, and social organizations worldwide are demanding
increased social accountability by multinationals. SA8000 may emerge as the
international social accountability standard. The adoption of SA8000 may be perceived
as a very rational, cost effective, and strategic approach to managing the corporation's
social reputation with its stakeholders. Consumers consider switching to another
company's products and services, speak out against the company to family/friends,
refuse to invest in that company's stock, refuse to work at the company and boycott the
company's products and services in case of negative corporate citizenship behaviours
(Edenkamp, 2002).
Brigitte Planken, Subrat Sahu and Catherine Nickerson (2010) investigated
corporate social responsibility platforms and the communication surrounding those
platforms in India. Indian consumers may not value philanthropic CSR as highly as
other CSR initiatives and that this may in turn influence their attitudes to different
marketing communication strategies. They also suggested that Indian corporations
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must formulate the form and content of their CSR policies in the future within a
marketing strategy in order to influence their stakeholders positively and increase their
competitive advantage.
CSR and Marketing
Today, branding has become the most important strategic differentiating activity
in a company's arsenal. In the future, a brand that can forge a durable psychological
bond between itself and all of its stakeholders / constituencies, its customers,
employees, suppliers and shareholders will represent the only real and sustainable
source of competitive advantage (Mythili Chandrasekar, 2006).
CSR plays a vital role in taking commercial brands out into the commercial
marketplace with a theme that is appealing to the sense and sensibility of the modern
consumer. CSR is therefore a valuable tool that marketers can use to market their brand
with equal panache and commercial effectiveness. The modern consumer understands
CSR that much more intimately. The future of marketing is full of CSR (Harish Bijoor,
2008). Marketers who ignore the responsibilities to other stake holders face the prospect
of a devalued corporate image and or legal reprisal. To meet the responsibilities
effectively organizations must address the concerns in the development of marketing
strategy (Robin, Donald & Reidenbach, 1987).
CSR has an important role to play especially in building up trust in the minds of
the consumers. In an emerging market where consumers are looking for functional
products which last longer and accelerated obsolescence is not a problem like in
developed markets, the consumer perception about the company brand assumes
significance. A company which builds the image of producing quality products that last
longer though they may not be on the cutting edge of technology will actually be able to
gain strategic advantage in emerging economies. Firms all over the world are beginning
to grasp the importance of intangible assets, be it brand name or employee morale. Only
firms that have gained the goodwill of the general public and are ideal corporate
citizens will be to develop these intangible assets into strategic advantages (Edenkamp,
2002).
Companies are beginning to realise the fact that in order to gain strategic
initiative and to ensure continued existence, business practises may have to be moulded
from the normal practise of solely focusing on profits to factor in public goodwill and
responsible business etiquettes (Raynard and Forstater, 2002). Corporate social
responsibility is arguably the most important thing on any brand marketer's mind. It's
important because studies increasingly show that consumers will spend their money on
brands that reflect their values and concerns (Mark Choueke, 2009). It’s such a shame to
see companies doing great CSR work then failing to use it to boost brand reputation
and sales. In today’s world, mainstream consumers look out for
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ethical/sustainable/responsible brands. The fact is that in today’s society all business
functions must understand social and environmental impacts and work towards
reducing or improving them. Unfortunately, marketing (unlike sourcing,
manufacturing, logistics, legal and many other functions) has been very slow on the
uptake.
Companies such as Marks & Spencer have already started to improve the links
between marketing and CSR, with impressive results. According to M&S’s CSR chief,
Mike Barry, “Look Behind the Label” has been their most successful consumer
communications campaign ever (Diana Verde Nieto, 2006). CSR practically has the
same effects as advertisements, because it sheds a positive light on a brand or product.
That is why CSR can also be seen as an expression of marketing. By including the brand
name in social responsible campaigns, brand awareness and brand recognition are
raised. It's clear that the concepts of value and values are rapidly merging in the minds
of consumers. People want to be engaged with companies that share their values (Scott
Beaudoin, 2009). As corporations pursue growth through globalization, they have
encountered new challenges that impose limits to their growth and potential profits.
while some companies use CSR methodologies as a strategic tactic to gain public
support for their presence in global markets, helping them sustain a competitive
advantage by using their social contributions to provide a subconscious level of
advertising (Fry, Keim & Meiners, 1986).
CSR has shifted decisively from the realm of `nice to do' to the realm of `need to
do' not just because it is a serious and sustained interest of consumers but also because
opinion leaders recognise the fact and will act accordingly. The notion of consumers
looking behind the label to see the company is becoming more widespread and people
want to work for corporations they feel good about. Given that CSR can appeal to
anyone from consumers and employees to the government and NGOs, it is easy to see
why corporations are striving to become socially responsible (Robert Gray, 2001). In
1970, Milton Friedman of New York Times rightly wrote: “ the social responsibility of
business is to increase profits.” The concept of CRM is a very effective tool for earning a
profit while at the same time being socially responsible. This is in essence what
marketing is all about and by using CSR in the form of CRM companies also involve the
customers in the process (Rickard, Richard Backteman & Temuulen Batmunkh, 2009).
As world changes, so do consumer attitudes and expectations of brands. While
many large companies have adopted corporate responsibility to improve business
practices, consumers are asking more. As global competition for hearts, minds, and
wallets intensifies, it will no longer be a question of whether a business should practice
responsible consumerism. This will be expected and demanded -while becoming
another point-of-entry hygiene factor. What will increasingly differentiate brands are
the quality and sustainability of this responsible consumerism. Brands whose
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organizational purpose, vision, and values are driven by this are set to flourish (Melissa
Davis, 2006).
Companies and their brands are key players on the global stage, and individuals
have the power to effect change through their buying choices. The benefit of a brand
using its marketing power to contribute responsibly can surely outweigh the cynicism
or option of doing nothing at all. For example, when a customer buys a Motorola Red
phone, the company donates £10 (US$ 18.58) to the Global Fund, while 5 percent of
every bill is donated by the phone carrier. As Motorola's Dale says: "Motorola doesn't
just want to be a great company, but a good company. It's not about the coolness of
cause-related marketing, it's about wanting to make a difference.
An increasing number of corporations are realizing the benefits that can be
derived from cause-related marketing (CRM) and are therefore adopting it as a
marketing tool to achieve their marketing objectives, by demonstrating a commitment
to improving the quality of life in the communities in which they operate. consumers
expect corporations to be actively involved in activities of CSR.
McWilliams and Siegel (2001) proposed that consumers tend to "demand" CSR-related
product attributes for product differentiation (such as social and environmentally
responsible sourcing and manufacturing) when consumer income increases. Firms
using CSR behavior to maximize profits, the use of CSR behavior as a mechanism by
which to build reputation and enhance competitive advantage is well accepted (Miles
and Covin, 2000).
Investments in corporate social responsibility are believed to create value not
only for stakeholders of the corporation, but also for a corporation itself. One possible
way in which this value for the corporation can be created is through the marketing of
corporate responsibility (Bert van de Ven, 2008). Marketing tools and techniques can
also be used in projects to promote good causes in a more effective way (Kotler and Lee,
2005).
In today’s competitive market environment, corporate social responsibility
represents a high profile notion that has strategic importance to many companies.
Importantly, along with increasing media coverage of CSR issue, companies themselves
are also taking direct and visible steps to communicate their CSR initiatives to various
stakeholders including consumers. CSR contributes positively to firms market value.
Managers can obtain competitive advantages and reap more financial benefits by
investing in CSR. Companies should realize that CSR initiatives can represent a robust
public relations strategy, particularly in the current market environment in which
stakeholders such as customers, may have strong social concerns (Xueming Luo,
Bhattacharya, 2006).
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CSR is reported to affect, either directly or indirectly, consumer product
responses, customer-comapny identification, customer donations to nonprofit
organisations and more recently customers product attitude (Brown 2001).
The brand building process is gradual, sustained one that needs a lot of investment both
financial as well as intellectual. For a company to be recognized and respected as a
responsible brand of the modern day world, the entire business model has to be made
sustainable one that ensures that it is not exploiting any of its stakeholders (Amit
Bapna, 2007).
In crowded marketplaces, companies strive for a unique selling proposition that
can separate them from the competition in the minds of consumers. CSR can play a role
in building customer loyalty based on distinctive ethical values. Act as a brand
differentiator. If companies do not inform consumers properly about the CSR
initiatives they take, they will not reap the benefits of their investments in CSR.
Corporate credibility, corporate positioning, and purchase intentions are all enhanced
when the initiatives are proactive towards society (Becker-Olsen et al., 2006). For
marketing of CSR corporates can use strategy of reputation protection and
improvement, the strategy of building a virtuous corporate brand and ethical product
differentiation (Bert van de Ven, 2008)
CSR at India
Several major CSR initiatives have been launched in India since the mid-1990s.
Nearly all leading corporates in India are involved in corporate social responsibility
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 disclosure norms.
Tata Group an India-based indigenous multinational enterprise with a unique
140-year old commitment to the community is the pioneer in India for CSR activities.
Despite the 2008-2009 global recession, the Tata Group topped the economic value
creation charts. In 2008-2009, the Group had grossed US$70.8 billion in revenues. 64.7
per cent of the Groups revenues were now coming from outside India. It explores
value-creation, leadership, ethics and sustainable development on the backdrop of
rapid internationalizations and shifting stakeholders' expectations for corporate social
responsibility (Oana Branzei, 2010) .
Although corporate India is involved in CSR activities, the central government is
working on a framework like CSR Credits for quantifying the CSR initiatives of
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companies to promote them further. 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.
Today, CSR in India has gone beyond merely charity and donations, and is
approached in a more organized fashion. It has become an integral part of the corporate
strategy. Companies have CSR teams that devise specific policies, strategies and goals
for their CSR programs and set aside budgets to support them. For example,
organizations like Bharath Petroleum Corporation Limited, Maruti Suzuki India
Limited, and Hindustan Unilever Limited, adopt villages where they focus on holistic
development. They provide better medical and sanitation facilities, build schools and
houses, and help the villagers become self-reliant by teaching them vocational and
business skills.
CSR has come a long way in India. From responsive activities to sustainable
initiatives, corporates have clearly exhibited their ability to make a significant difference
in the society and improve the overall quality of life. Corporates have the expertise,
strategic thinking, manpower and money to facilitate extensive social change. Effective
partnerships between corporates, NGOs and the government will place India’s social
development on a faster track ( Ramya Sathish,2010).
CSR at Intel
Marketing is only Marketing when it's sustainable. Intel has always worked on
the premise that CSR Marketing without CSR substance is not marketing at all. It’s plain
wrong. But when there is real substance - real activity and achievements - then there is a
real marketing story to tell. One that communicates reliability and strengthens the
brand. This makes corporate responsibility coupled with clever marketing and clear
communications a winning formula. Intel managed to build a synergy between
growing its business and spreading computer education amongst communities in India.
Intel uses its CSR programme to spread computer usage ans scientific temper among
the larger population in the countries it has a presence in. For the spread of computer
education alone, the company spends as much as $100 million every year.
One of Intel’s key programmes, called “Intel - Teach to the future”, targets
teachers in schools, colleges and teacher training institutes to make them adept at
handling technology in the classroom and importing digital learning to future
generations (Preeti Mehra, 2004). Corporate responsibility for Intel is also about
innovation since it apply resources to address global challenges.
CSR at Microsoft
Microsoft has been right in the forefront when it comes to programmes that
address the semi-urban, rural, non-English speaking people in the country. And not just
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as a charity provider. Apart from the grants that Microsoft has made, to the tune of
more than $1.15 million in the country, Microsoft is frequently coming up with software
that addresses the needs of this section. Recently, as part of its efforts at bringing an
affordable local language computing solution for India the company launched its
Windows XP starter edition exclusively developed for India (Kripa Raman 2006).
CSR at HUL
Hindustan Unilever is involved in number of CSR initiatives in India. The main
objective of Project Shakti of Unilever is creating rural entrepreneurs. It trained 13,000
underprivileged Indian women distribute the company’s products to 70 million rural
consumers. The company is working with women’s self-help groups to teach selling
and book-keeping skills and build commercial knowledge. The women who participate
in this programme are, by and large, able to double their household income. Shakti has
also allowed Unilever to increase its reach to 30% more of India’s rural population since
its inception in 2000. The company is joined in its efforts by some 300 groups, NGOs,
banks and various government entities allowing it to take part in strategic publicprivate
partnerships (Joseph Vackayil, 2007).
CSR at Coca-cola
Coca-cola India worked hard towards water conservation and community
development has been given Golden Peacock Global award 2008 for CSR. The award
has been conferred to Coca-Cola India for its efforts in water conservation and
management and community development initiatives. The soft drink major now has
320 rain water harvesting implements across 17 states in India, and it has also been
successful in restoring water conservation programme. Side by side, the company is
running the ‘Elixir of Life’ project that provides drinking water to 30,000 children in 100
primary and panchayat schools in around Chennai. Coca-Cola India undertakes a
diverse range of activities for the benefit of the community across the country (Deepak
Kaul, 2007).
CSR at Amway
Amway is one of the world’s largest direct sales organisations with over 3
million Independent. Business Owners (IBOs) in over 80 markets and territories
worldwide. It is a family-owned. business with a strong emphasis on family values.
Many of these are raising families. They therefore have a strong bond with children.
These families are more than happy to partner with Amway, who, as part of its
Corporate Social Responsibility strategy, works with UNICEF, the United Nations
Children’s Fund. As a family company, Amway is committed to playing a part in
improving the lives of children in need across the globe. In this way, the company is
able to show its commitment to the support of global causes. Amway defines a global
cause as ‘a social issue affecting many people around the world engaged in a struggle or
plight that warrants a charitable response’. Amway’s vision is to help people live better
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lives. It does this every day by providing a low-cost low-risk business opportunity
based on selling quality products.
CSR at Canon
Successful global businesses have the power to make a real difference. Economic
performance and social responsibility can go hand in hand, when there is a genuine
consideration to make an impact on the communities and the environment. True global
companies must foster good relations with customers, communities in which they
operate, nation and bear the responsibility of the impact their activities have on
environment and society. Corporate Social Responsibility at Canon is a true effort to
influence society in a manner that earns the trust and respect of stakeholders and
society. This belief in positive behavior has been embedded in the way canon work for
decades since introduction of its corporate philosophy of Kyosei. A concise definition
of Kyosei is "Living and working together for the common good". According to Canon,
All people, regardless of race, religion or culture, harmoniously living and working
together into the future.
CSR seems to be a mandatory practice adopted by almost all companies but at
GE India, CSR being handled in a different way. GE had adopted an NGO called Vidya
which has been educating underprivileged children for the past 18 years at New Delhi.
GE’s association with Vidya began when 15 employees of GE India started mentoring
school children and helping them in clearing their 10th and 12th standard examinations
(Aabhas Sharma, 2006).
GlaxoSmithKline Pharmaceuticals’ CSR programs primarily focus on health and
healthy living. They work in tribal villages where they provide medical check-up and
treatment, health camps and health awareness programs. They also provide money,
medicines and equipment to non-profit organizations that work towards improving
health and education in under-served communities. SAP India in partnership with
Hope Foundation, an NGO that works for the betterment of the poor and the needy
throughout India, has been working on short and long-term rebuilding initiatives for
the tsunami victims. Together, they also started The SAP Labs Center of HOPE in
Bangalore, a home for street children, where they provide food, clothing, shelter,
medical care and education. (Ramya Sathish, 2010). Pepsico plans to widen its product
its portfolio in India and build the brand’s image around corporate social
Responsibility. Nike managed CSR as a core part of business (Simon Zadek ,2004).
Benefits of CSR
A new era of social consciousness is evolving throughout the world. Over the
last 20 years, we have shifted from functionally centric brands to emotionally
centricbrands
to values-centric brands. Today, brands must be inspirational in a socially
responsible way. It is no longer enough for brands to define themselves in terms of
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what they are: they must make a statement—environmentally, culturally, and socially—
about what they want to be. A key advantage of these corporate initiatives is that unlike
in the traditional brand-marketing domain, a firm’s intangible assets, when strategically
deployed, can be marketed not just to its customers but to other stakeholders as well.
Clearly, measures of intangible assets and their dependencies are growing more
important. Many companies use CSR as a way to burnish their image, generate brand
equity, and increase employee loyalty. In this era of global competition, declining brand
differentiation, and increasing media clutter, companies are going beyond the
conventional marketing mix to incorporate corporate-level intangible assets such as
their identities and reputations and the goodwill associated with being a good
corporate citizen into their marketing initiatives in efforts to gain sustainable
competitive advantages.
Companies have been encouraged to adopt and expand CSR efforts as a result of
pressures from customers, employees, communities, investors, activist organizations
and other stakeholders. As a result CSR has grown dramatically in recent years.
Companies have experienced a range of bottom line benefits from being engaged in
CSR which include improved financial performance, reduced operating costs and
increased sales and customer loyalty A number of studies conducted in past arrived at
positive association between CSR and financial performance (Ruf et al, 2001).
A company considered socially responsible can get benefit both by its enhanced
reputation with the public as well as its reputation within the business community.
Social action programs create favorable public image (Rashid and Ibrahim, 2002).
Hindustan Unilever Ltd. (HUL) through its Surf Excel brand gained immeasurable
reputation in the course of its campaign of education to poor children. In a survey
conducted by Confederation of Indian Industry (2002), majority of the corporate
respondents had the perception that CSR leads to improved brand image.
Companies going for CSR find it comparatively easy to recruit and retain the
skilled employees for a sufficient long period of time which are vital for the success of
business (Krishna, 1992). This is empirically tested and proved by Turban and Greening
(1996) that corporate social responsibility is positively related to a firm's attractiveness
as an employer. In a subsequent study by Luce et al (2001), it was evidenced that
corporate social performance is positively related to a firm's familiarity which in turn
affects organizational attractiveness as an employer. Consumers expect firms to conduct
business ethically, and they also showed their willingness to reward ethical behavior
and punish the unethical behavior of firms through their purchase behavior. Customers
prefer to purchase from the companies which are conscious about CSR.
Companies are changing the way they market their corporate social
responsibility (CSR) initiatives – more and more of them are becoming increasingly
International Trade & Academic Research Conference (ITARC) - London 2010
transparent about their supply chains and are fostering dialogue with their customers.
Companies such as Nike and Hewlett-Packard have led the way by making information
available online regarding their supply chains. Openness builds trust and trust
translates into transactions (Grace Segran, 2010). Corporations often willingly engage in
socially responsible behaviour precisely because it enhances shareholder value.
Moreover management believes such activities create goodwill among customers in
excess of their price tag (Roger Martin, 2002).
Today companies with the help of CSR reaping the benefits that are proactively
and strategically building their "Social Brand Capital". Social Brand Capital (SBC) is
the loyalty value that stakeholders attribute to a company's brand as a result of the
company's commitment to social/environmental causes. As Michael Porter and Mark
Kramer recently stated, "adding a social dimension to your value proposition offers a
new frontier in competitive positioning." GE and FedEx are great examples of
companies in this stage of building their SBC. FedEx is introducing a low-emission
hybrid electric powered delivery vehicle that could become the standard medium duty
delivery truck in FedEx's fleet. GE's "ecoimagination" project is infusing US$1.5 billion
into developing ecologically responsible innovation that will reduce greenhouse
emissions (Rachel Simmons, 2010).
CSR helps in increased market share and new market penetration and also helps
understand and transform public perception of a company and industry. In fact
companies can successfully make a business case for improving profitability through
higher market share and increased customer loyalty if they can demonstrate their CSR
practices as unique differentiator (Balasubramanian, 2007). CSR is considered to be an
important aspect of business success through efficient resource management,
environment protection, employment, eco-friendly atmosphere, etc.
Conclusion
The concept of CSR has become more and more common in business practices
and customers today almost expect companies to be socially responsible. Even though
CSR is very important for companies, it has historically not been a very lucrative
approach for them to involve in these activities. The business of the 21-st century will
have no choice but to implement CSR. Like any successful management strategy, a CSR
process needs both high level management vision and support, and buy-in at all levels
of the company. CSR does not give immediate results. The same CSR initiative will also
not work for all types of organisations. Designing CSR initiative requires careful
planning and implementation mechanism. Corporates should integrate the innovative
CSR strategies into different marketing communication strategies to build and sustain a
competitive advantage.
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