what are the components of a strategic csr plan

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Strategic corporate social responsibility.

What is strategic corporate social responsibility and how can I make it part of my organization’s strategic plan? Corporate Social Responsibility, or CSR , is defined by Stanford University’s Graduate School of business as the following:

Corporate Social Responsibility (CSR) is an organization’s obligation to consider the interests of their customers, employees, shareholders, communities, and the ecology and to consider the social and environmental consequences of their business activities. By integrating CSR into core business processes and stakeholder management, organizations can achieve the ultimate goal of creating both social value and corporate value.

As of late, CSR has gained noteriety as businesses have responded to two major changes in the last 5-10 years: the increase of public concern over the enviornemnt and the free flow of information afforded by the internet.

In the last several years, movies like An Inconvienient Truth and events such as Live Aid and Earth Day have brought climate change and protection of the Earth’s enviorment into the forefront of people’s minds. As stakeholders in any organization’s strategic plan, the public represents shareholders, customers, employees, suppliers- everyone. Whatever issues that the public sees as important, organizations should take notice of. An organizstion seen as harmful to the enviornment is very likely to be seen as socially irresponsible, and therefore risks the relationship with all of its stakeholders.

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Another trend increasing the importance of CSR is the increased use of the internet to access and trade information. Whereas in the past, the details of a company’s actions may have been restricted to newspaper clippings from the business section or academic discussions in the classrooms of business schools, these days any company seen being socially irresponsible may show up in mass emailings, facebook postings or even myspace bullitens- seen by tens or even hundreds of thousands of people in a day. Today, more than ever, companies are under the watchful eye of their stakeholders.

So what is Strategic Corporate Social Responsibility? By taking a strategic approach, companies can determine what activities they have the resources to devote to being socially responsible and can choose that which will strengthen their competitive advantage. By planning out CSR as part of a company’s over all plan, organizations can ensure that profits and increasing shareholder value don’t overshadow the need to behave ethically to their stakeholders.

• Strategic CSR provides companies with solutions for:
• Balancing the creating of economic value with that of societal value
• How to manage their stakeholder relationships (especially those with competing values)
• Identifying and responding to threats and opportunities facing their stakeholders
• Developing sustainable business practices
• Deciding the organization’s capacity for philanthropic activities

Does your organization employ Strategic CSR? If you would like to incorporate CSR into your strategic plan, feel free to check out more of our resources library, and if you need any help please let us know.

Thanks alot for the insight I have gained alot from your approach to CSR. My interest is on how to prepare an annual CSR plan for a state corporation that is not necessarily for profit making, just provision of public services such as water.

Thank you for the article. I have to propose a CSR plan for a fictive company during my studies. Could you maybe help me with how to start a CSR plan from scratch? I would reall appreciate your response. Regards, Alexandra

The CSR strategy should encompass both an internal and external focus. I’ve worked with several companies on this so feel free to email me to chat!

Small, informative and thought out article. Thanks

Very true. I’m a publicity consultant and I have experienced this.

strategy plan for csr for a financial company

How does the CSR influence company’s strategic plan?

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Your CSR Strategy Needs to Be Goal Driven, Achievable, and Authentic

• Tabitha Upshaw

Six steps to ensure you make a meaningful impact.

As more companies commit to adopting CSR strategies that address environmental and social issues, it’s becoming more important than ever for these strategies to be goal-driven, ambitious yet achievable, and authentic. The author outlines six tips for companies to develop this kind of CSR strategy: Get buy-in from executives, determine material issues, align goals to company values and culture, establish a goal framework, create a system of implementation and accountability, and deliver transparent reporting.

We are in the era of impact investing and big pledges as companies step up to tackle the toughest environmental and social issues of our time. GM has vowed to be carbon neutral by 2040, Apple is investing $100 million in their Racial Equity and Justice Initiative, and Target plans for 100% of its owned-brand products to be designed for circularity by 2040. These types of commitments are critical because big problems like climate change and inequality require big, systemic solutions. Today’s consumers and investors are also demanding change: 71% of U.S customers want to buy from socially responsible companies, and the Intergovernmental Panel on Climate Change’s landmark global warming report is prompting investors to take more aggressive action toward lowering their portfolio’s carbon footprints.

Companies who don’t take action risk losing investment opportunities and market share — not to mention being left behind as problems like climate change become increasingly dire.

A goal-driven corporate responsibility strategy can help companies challenge themselves to think bigger and do more while also increasing their accountability to stakeholders. However, setting corporate responsibility goals is not a one-size-fits-all proposition. A large retail chain’s goals may be very different from those of a small software company’s. The key is to develop a set of goals that are rooted in your company’s brand, business strategy, and culture. This will increase your likelihood of success. If you don’t adopt a strategy that feels authentic to your customers, you risk being accused of greenwashing or performative activism; if you adopt a strategy that is too ambitious, you risk falling far short of your goals. Either way, you risk losing credibility and public trust.

Whether your company’s corporate responsibility initiatives are driven by a dedicated department or another function such as operations or public affairs, here are six tips to consider when developing a goal-driven corporate responsibility strategy that suits your organization.

Get Buy-in From Your Executives

Getting buy-in from your CEO and executives before developing a strategy will ensure it reflects your company’s highest priorities. Executive support of the strategy will communicate its importance to employees and other stakeholders. The executive support will also help facilitate a successful companywide implementation.

So how do you get your leaders on board? Demonstrate the business value of a goal-driven strategy by showing how it will drive positive impact and position the company competitively. Use examples to educate executives on corporate responsibility goals and how they can drive long-term value for stakeholders. Pull not only examples from larger companies but also smaller companies that are widely admired in your community. You can complement market data with proof points from your own business, such as cost-savings realized by investing in energy efficiency or an uptick in sustainability questions received from investors or customers. And consider incorporating insights from industry leaders and results from competitors’ corporate impact strategies.

Determine Your Material Issues

The next step of goal-setting is to identify your material issues: the areas that matter most to stakeholders and where your company can deliver the most impact through its operations, products, and services. For example, setting goals related to sustainable agriculture would make more sense for a food company than a technology company. A technology company might instead focus on protecting data privacy, donating time and money to STEM education, and investing in circular design practices for their products.

Conducting a materiality assessment can define your company’s core issues and can be done either in-house or through a third party. If you decide to manage the assessment internally, a good place to start is by determining which of the United Nation’s 17 Sustainable Development Goals (SDG) are most relevant to your organization and industry. For example, an energy company that builds and develops smart grids would have an interest not only in SDG 7, Affordable and Clean Energy, but also in SDG 4, Quality Education. By committing resources to STEM education programs, the company can ensure the long-term stability of its industry and company, which will require trained experts to drive innovation and future growth.

Materiality assessments also include surveying your company’s stakeholders to determine which environmental, social, and governance issues are most relevant to them and where they see the greatest potential for impact. To develop a list of issues for this survey, helpful references include the SDGs, the corporate responsibility reports of other companies in your industry, and guides from sustainability organizations such as BSR . After your surveying, review any related internal data, such as that related to your environmental footprint or internal diversity and inclusion efforts, to see how these compare to stakeholders’ stated priorities.

Align Goals to Company Values & Culture

After determining the broader material issues, an important next step in goal-setting is to discuss how to approach these issues in a way that is authentic to your company’s purpose, values, brand, and culture. Assemble a diverse, cross-functional, and global team for this exercise, and ask yourselves: How can we best use our unique strengths to make a difference? For Apple, financing a developer academy for underserved students fits its brand. The community can trust the company to recognize and provide quality technical education. For a small regional bank, an authentic goal could be offering free financial literacy programs to decrease gender and racial wealth gaps.

Consider how team members across business units and time zones could work together toward a common cause. For example, if your technology company has a strong culture of volunteering, an attainable and measurable goal could be committing 1% annually of employees’ time to volunteering with local STEM organizations.

At NI, we looked for ways to develop a strategy that was true to our values: be bold, be kind, be connectors. We decided to set a goal to achieve Zero Waste at NI-owned buildings and reduce waste at leased facilities by 2030. This goal offers every employee at NI a tangible way to make a difference each day, whether by switching to reusable products, connecting with a working group, or working on solutions like a new composting program. Setting goals that reflect your company’s values will create greater employee engagement, which is an essential element of any successful corporate responsibility program.

Establish Your Goal Framework

Once you determine your specific goals and ensure they align with employee, customer, investor, and executive priorities, you’ll want to establish a framework that organizes and communicates the goals in a memorable, effective way. One approach is to organize goals into a broad framework around areas of impact such as People, Communities, and Planet. Or, to keep both internal and external stakeholders focused on your company’s ultimate vision, you could develop a more results-oriented, industry-specific framework. For example, at NI, we reframed “people” as “ Changing the Faces of Engineering ” to reflect the desired outcome of diversifying the engineering industry.

It is also a good practice to create a framework with goals that range in difficulty and level of ambition. While it’s human nature to want to set goals we know we can achieve, sometimes big problems require big solutions. Challenge your organization to include one or more moonshot goals, such as a net-zero emissions target or a bold diversity goal, that push you to think bigger. The rest of your goals can be a mix of challenging-yet-attainable targets and ongoing commitments. For example, LEGO has committed to making all of its core products from sustainable materials by 2030, which is challenging the company to create new alternatives to traditional plastics. LEGO complements that moonshot goal with more attainable targets such as bringing learning through play to 8 million children annually through its local community engagement programs in 26 countries.

Create a System of Implementation and Accountability

Achieving corporate responsibility goals requires consistent effort and collaboration across an organization. Working toward a waste reduction goal may require your facilities managers to assess waste management contracts, your procurement teams to buy fewer disposable products, and your employee resource groups to organize education campaigns. To keep everyone on track, it’s helpful to create a governance system.

A concrete approach to creating a company-wide implementation and accountability system is to establish a corporate responsibility council of executives and senior managers that is accountable to the board of directors. Identify one or more “goal owners” for each goal — employees that will be responsible for developing and managing the company-wide implementation strategy and reporting progress to the council. For example, the head of research and development might be the goal owner for a company’s circular design goal and would assemble a task force of product and packaging engineers to create a road map for producing and shipping products with less waste.

Deliver Transparent Reporting

When developing a communications plan to announce a corporate responsibility strategy and goals, focus on three principles: honesty, transparency, and repetition. Be honest about where your company and industry have come up short, whether that’s workforce diversity or greenhouse gas emissions levels. Be transparent about your plans to address these issues and work toward your goals. And look for every opportunity to repeat your messaging, especially among employees, who are your chief ambassadors and implementers.

For example, as Dell Technologies worked toward its Net Positive goal (to contribute more to the world than it takes out) over the last decade, the company regularly and publicly talked about the challenges of measuring such a goal. It worked with other companies to advance the nascent field of Net Positive measurement. And the company now has a new bold yet measurable goal: achieving net zero emissions by 2050.

These same three principles apply to corporate responsibility reporting. Publish your goals and then regularly and publicly report challenges and progress, no matter how incremental. Decide how progress is communicated and how often, and set that expectation with your stakeholders. An annual corporate responsibility report is the most traditional means of sharing updates, and you’ll want to choose the global reporting framework most appropriate for your metrics and audiences (such as GRI , Global Reporting Initiative, or SASB , Sustainability Accounting Standards Board). Additionally, a steady drumbeat of messaging throughout the year will help raise awareness and being honest about both your wins and challenges will build public trust. Think about creative, effective ways to reach your audience, including through social media, blog posts, or investor Q&As.

Finally, don’t forget to be proud of the work you’ve done and what you’re building. While you may not have a $100 million budget to pledge, remember that you have something just as valuable to share: an authentic, research-based corporate responsibility strategy. No matter how big or small the company, we can all use our unique gifts for good. Imagine the impact we can make together.

• Tabitha Upshaw leads NI’s global corporate impact strategy. Prior to NI, Tabitha was the first chief marketing officer of Global Wildlife Conservation . She also created and led Dell ’s CSR marketing function and did the same for SunPower . Pulling from these experiences, Tabitha built and led the development of NI’s first Corporate Impact strategy, a series of goals and commitments to realize a vision of a more sustainable and equitable world where diversity is embraced to drive innovation.

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7 Best Practices for Creating an Impactful CSR Strategy

Updated: 02/01/2023

Once upon a time, businesses could focus on profitability above all else. 

Not any more: modern companies are expected to care about making the world better. They’re expected to serve their communities, listen to their customers, take public stances (and action) on important issues, value and support employees, work for sustainability, and respond to current events. 

CSR (corporate social responsibility) programs are one way businesses are meeting this mandate. And standout programs addressing social and environmental issues are most often the result of thoughtful CSR strategies. 

Whether you’re new to CSR or looking to refine existing initiatives, understanding the ins and outs of CSR strategy is a prerequisite for creating successful programs with lasting impacts. The new “business as usual” demands smart social responsibility—are you ready to meet the challenge?

What is CSR strategy? Why have a CSR strategy? Best practices for creating a CSR strategy

What is CSR strategy? 

CSR strategy is the comprehensive plan companies and funders use to design, execute, and analyze their corporate social responsibility initiatives. It includes specific focus areas, program design, promotion and communication approaches, and evaluation procedures. 

Most companies with thriving CSR initiatives use strategy to build and monitor their programs; a few of these companies also share their strategy publicly. Nestle is a great example, offering detailed insight into their brand’s approach (called “Creating Shared Value”) that includes long-term goals for serving individuals, families, communities, and the planet, as well as measurement procedures and transparent performance and reporting .  

Some companies also release an annual corporate responsibility report which is another useful way for you to see what a CSR strategy can look like. Google’s 2020 Environment Report includes priorities, company mission, performance targets, and detailed analysis in five key focus areas. 

Why have a CSR strategy?

In the world of CSR, it’s especially prudent to look before you leap. 

This is because successful CSR initiatives are intricate, complex, and require demonstrable impact. They’re also public-facing (and potentially brand-damaging when done poorly). And they offer a host of business benefits you might miss out on by failing to plan. 

A well-crafted CSR strategy can help you:

Keep everything organized

Great CSR initiatives involve lots of people, multiple goals, tons of data, and countless responsibilities. Your CSR strategy is an opportunity to get everything in order and prepare to stay on top of all the details. 

Improve impacts

According to Deloitte’s third annual global survey of more than 2,000 C-suite executives at companies with societal impact goals, the presence of comprehensive strategy directly correlated with greater success (measured by innovation, growth, and employee acquisition). 

Protect your brand reputation 

Launching a corporate responsibility initiative without proper foresight is a big risk—that’s because your CSR program will be a public-facing endeavor with multiple stakeholders and partners who expect follow-through. Strategic planning can reduce the possibility that your company will gain a reputation for big talk and no action, which can ultimately harm your bottom line.

Take full advantage of CSR program benefits

CSR has a host of potential benefits for your company. A successful corporate responsibility initiative will benefit your community and serve your employees. It will also improve your brand image, attracting new talent and increasing customer loyalty. Ultimately, these outcomes can contribute to revenue and drive your company’s growth. In order to reap the full business benefits of CSR, you’ll want a strategy that’s brand-aligned, well-researched, responsive, partnership-driven (at all levels), and constantly evolving in pursuit of positive impacts everyone can feel good about.

Best practices for creating a CSR Strategy

Understanding the role and value of a CSR strategy is an important first step. 

Now, how do you create and develop a CSR strategy that gets results? There are seven key tactics for strategic planning that will help improve the outcomes of your business’s CSR activities.

1. Link to company values

Whereas CSR was once seen as a peripheral approach to boosting business performance and legitimacy, today’s best CSR initiatives are squarely brand-aligned and central to operational strategy. 

Connecting CSR to business strategy is increasingly a corporate best practice, as evidenced by the 181 CEO’s from brands like Amazon, Citigroup, and Ford who signed Business Roundtable’s latest Statement of Purpose , indicating a commitment to “ to lead their companies for the benefit of all stakeholders—customers, employees, suppliers, communities, and shareholders. ”

What it looks like to align your CSR strategy with your brand, core competencies, and operational strategy, will be different for every company.

WarnerMedia’s Access Writers Program is a great example of a CSR initiative that clearly links back to company values: WarnerMedia is a media corporation focused on diverse entertainment whose latest program seeks to improve the access marginalized community members have to professional opportunities in television. 

2. Get insights from your various stakeholders

You’ll want to develop a strategic plan for CSR inspired by what your customers, employees, and community members care about. You might also seek inspiration from what’s worked for other brands already. Here’s how:

Poll your customers

The creation of a CSR strategy is a great excuse to connect with your customer base. Build a short, easy to access poll to collect the following information:

• Which environmental and social issues matter most to your customers?

Design your poll in alignment with your brand. For example, if you sell custom T-shirts, are customers most interested in your sustainability, supply chain, dedication to labor and human rights, or donations to kids in need? Focused questions will lead to more actionable results.

• What do customers know about your current giving and initiatives?  

If you have run programs in the past or currently engage in CSR, how well did you communicate about them? Are your initiatives known for success?

• What associations do customers have with your brand? 

This is a great opportunity to collect data about your business’s image, which you can try to influence in your new CSR strategy.

To help boost participation, consider offering an incentive to customers who complete your poll, such as a discount or entry into a drawing. 

Collect employee feedback 

Your CSR strategy doesn’t move without your employees. Start by determining your employees’ preferences and using that information to help build your overall strategy. 

A survey is a great tool to collect this important information, combining multiple-choice and open-ended questions. 

As an example, for your T-shirt company, you might have employees select between three brand-aligned volunteer opportunities followed by an opportunity for open feedback. This approach will you help you get the targeted data you need and also help employees feel heard and valued. 

Assess community needs

What “community” looks like is unique for every business. Taking time to research and consider what your community needs is a great first step towards building the partnerships your CSR program will need to succeed. 

Community Tool Box offers great suggestions for understanding community needs and resources, with methods that can be combined, depending on the extent of data you’re looking to connect. 

3. Borrow great strategy

Your CSR strategy doesn’t have to reinvent the wheel. Spend time exploring where other businesses have succeeded in their sustainability, charitable giving, and employee engagement, for example. Don’t worry about being derivative: your strategy will necessarily be unique because your brand is unique and so are the people you care about and listen to.

One way to find brands doing the best CSR is via reports like “ America’s Most Responsible Companies ” from Newsweek and Statista—and congratulations to HP , Cisco , and Dell for top success in three focus areas: environment, social, and corporate governance. 

Harvard Business School’s Baker Library offers a comprehensive list of social responsibility ratings and reports for companies. Of particular interest is Fortune’s “ Change the World ” list—you’ll find PayPal and Zoom in the top 10 for 2020. 

Many companies have aligned their CSR activities in some way with the UN’s 17 Sustainable Development Goals (SDGs) that include issues like poverty, hunger, education, gender equality, and action around climate change. Chevron’s corporate sustainability program , for example, clearly lays out how the company is addressing every SDG, and Target includes an SDG index in their 2020 corporate social responsibility report .

4. Establish internal buy-in

You’ll need your team’s support, enthusiasm, and dedication to make your social responsibility program thrive. Engage employees early in the strategy process by being responsive and inclusive.

Respond to team values

Once you’ve assessed what your employees care about most and where they want the company to focus, put this data to work. 

It probably won’t be possible to incorporate everyone’s feedback in your strategy, but at the very least, share your findings with the group. Your team will enjoy learning about what their colleagues value.

Use the information you’ve collected to identify top areas of interest and common suggestions for your CSR strategy. Try to actively pursue at least one employee-sourced initiative every quarter or fiscal year, with formal plans for addressing additional issues in the future. 

Involve employees in strategy-building

Research shows that shared leadership and employee-empowerment have a number of benefits , including increased team effectiveness, a stronger sense of community, improved employee perceptions of management, higher levels of employee satisfaction, and less burnout. 

That data combined with evidence that corporate social responsibility boosts employee motivation and increases employee engagement makes sharing the planning of your program with staff a natural win-win.

Whether you establish an employee-led committee or include employee representatives in planning sessions, be sure employees are actively engaged and aligned with your CSR visions and values, missions and goals, and on-the-ground initiatives. 

5. Build external partnerships

There’s already good work going on in the communities you’re looking to empower. Seek out the organizations and individuals doing this work early in your CSR strategy development process. 

Many businesses are already reaping the value of partnership-driven CSR. This list from Donorbox offers examples of 14 major brands, including Adidas, IKEA, Apple, and BMW, that have partnered with community nonprofit organizations to better meet their CSR goals.  

Community organizations will have the knowledge and experience to put your brand’s funding, sponsorship, or employee volunteerism, for example, to the best use. As philanthropic leader Edgar Viallanueva recently advised, “ You shouldn’t feel that you need to recreate what’s already in place. Find organizations that have established relationships with grassroots communities and trust them to get the money to the right people. These bridge organizations often have the relationships and trust, but lack sufficient capital.”

Approach community partnerships with humility and take a learning stance—what do partner organizations need most and how can your business help? In addition to deep listening, be sure you’re establishing authentic relationships with partners. Sustainable and equitable partnerships (as opposed to shallow partnerships for the sake of PR) require that community members hold actual decision-making power, especially regarding campaigns that will directly affect them. 

6. Be clear and transparent

Once you’ve tackled brand-alignment, stakeholders’ concerns (including customers, employees, and community members), and partner-driven strategy, it’s time to distill this wealth of information into a clear communication plan.

Get specific about goals and outcomes

Your CSR strategy should be as clear and specific as possible for a few reasons:

• A clear strategy helps keep everyone on the same page
• The more focused your goals are, the easier it will be to assess if you’ve met them 
• Clarity reflects positively on your brand’s commitment to corporate social responsibility, demonstrating rigor and care

Aim for precise language, numbered goals (each communicated in a single sentence if possible), key strategies and initiatives for meeting each goal, and measurement tactics for assessing progress towards each goal. Be sure to include your mission, vision, and partners.

Campbell’s Soup provides a great example of clarity and synthesis in its corporate responsibility strategy—especially this goals chart which lists target objectives alongside current progress displayed numerically and graphically.

Make a communications plan

Your CSR strategy shouldn’t be a secret. Think through how you’ll share this information internally and externally to foster enthusiasm, boost stakeholder engagement, and enhance accountability.

Your CSR strategy should include your plan for regularly and publicly discussing your CSR initiatives—via your website, social media, newsletters, email updates, reports, and even press releases. 

Sharing high-level corporate strategy publicly can help generate interest in your CSR programs. It also indicates transparency and accountability—you’re sharing your plan because you intend to follow through and be accountable.

Use the same principles for sharing your strategy that you will to talk about your active and completed CSR campaigns, including these considerations adapted from the EMG group :

• Objectives: What do you want to accomplish with your CSR communication plan?
• Audience: Who will you communicate with? 
• Subjects and key messages: What will you tell your audience about?
• Timescales: When will you communicate about CSR?
• Channels: Where will you communicate with your audience?
• Feedback: How will your audience be able to engage with you?

7. Learn, respond, and improve

In the world of CSR, there is always room for improvement, because CSR is about people and people are dynamic. Our needs change and so does the world we live in. 

Accordingly, your CSR strategy won’t be complete without a plan for learning, adjustment, and growth—or as Global Giving puts it, the opportunity to “Listen, Act, Learn. Repeat.” 

Plan for reporting and feedback 

Data and feedback collection should be an essential part of your CSR strategy. Don’t wait for an initiative to finish to consider how you’ll assess outcomes—planning ahead will help ensure your whole strategy is aligned with what you hope to achieve and how you’ll demonstrate progress.

You also shouldn’t wait until the end of a campaign to begin your learning process. Establish a timeline for collecting information at regular intervals throughout your initiative.

There are plenty of ways to collect data and feedback, including interviews, surveys and questionnaires, observational data, focus groups, public forums, oral histories, or some combination of these. Plan to use the tools that make the most sense for your CSR initiative. 

Whichever method you choose, be sure your strategy involves connecting with all relevant groups and stakeholders. What results did you achieve among community members and where could you improve? How did employees feel about your CSR program and what suggestions do they have going forward? Were customers interested in your campaign? 

Your plan for measuring CSR performance should include how you’ll collect information and from whom, how you’ll assess the data, how you’ll share your findings, and how you’ll incorporate suggestions for improvement.

Be responsive to learning and to the moment

Your CSR strategy shouldn’t be iron-clad. It should evolve in response to new insight and data. Think of your strategy as a working, living document that can and should continue to improve, even mid-campaign, as necessary. 

Ready to meet the moment with smart CSR?

Submittable’s social impact platform can help you manage initiatives and amplify impact, easily.

As an example, the events of 2020 forced businesses to reconsider their existing CSR programs. Many companies chose to pivot in response to COVID-19 and movements for racial justice. The publicity around these shifts, including critiques of hollow brand statements , underscored the importance for socially responsible companies of clearly linking action (via CSR) to rhetoric.  

According to Mark Horowitz, CEO of Moving Worlds, global events have resulted in a tipping point for CSR , wherein business leaders are making bigger promises without changing operations to support their proposals. More than ever, he argues, companies must respond to the moment and take real action: “The next 10 months will define the CSR space for the next 10 years … CSR leaders within companies have the opportunity to right the position of corporations in society.” 

While it’s vital to stay responsive, be wary of altering key goals and measurement tactics before you’ve had time to accurately assess them. Not only do you open your company up to critique for empty promises, but change doesn’t happen overnight and long-term objectives require longer-term measurement. 

As Neil Buddy Shah, Managing Director at GiveWell, shared in a recent panel on impact data , you risk good ideas failing when organizations run an impact evaluation that is too rigorous too early.

Time for action: Bring your CSR strategy to life

A thoughtful CSR strategy requires time, thought, and teamwork to build. Make the best use of your efforts with tools that help transform your vision into action and results, faster.

Submittable’s CSR solution can connect your business to important causes while dramatically reducing the time it takes to oversee your corporate giving program. Manage corporate grants and scholarships, coordinate employee volunteers and giving programs, facilitate community sponsorships, and much more. We’d love to walk you through the platform— sign up for a free demo today. 

Rachel Mindell is a Special Projects Editor at Submittable. She also writes and teaches poetry. Connect with her on LinkedIn.

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Corporate social responsibility (CSR): A one-stop guide

What is Corporate Social Responsibility?

What is corporate social responsibility (CSR)? As with most business concepts, corporate social responsibility has several definitions, but these broadly coalesce around some core themes. Investopedia ’s definition of corporate social responsibility is “a self-regulating business model that helps a company be socially accountable — to itself, its stakeholders, and the public.” Harvard Business Review  sees CSR’s primary goal as “to align a company’s social and environmental activities with its business purpose and values.” At the same time, the European Commission  defines CSR as “the responsibility of enterprises for their impact on society.” Diligent's corporate social responsibility definition: CSR is an organization's obligation to act ethically and to the benefit of the community it is a part of and depends on.

Why Have More Companies Become Concerned About Corporate Social Responsibility in Recent Years?

The importance of corporate social responsibility (CSR) has undoubtedly grown over the last decade. When looking at why CSR is increasingly important, one should consider the impact of CSR on all elements of corporate life. Alongside the altruistic drivers — the growing recognition of the importance of corporate social responsibility to society — organizations acknowledge the importance of corporate social responsibility in business. CSR’s impact on a brand’s image has been evident in recent years, with numerous examples of a company’s supply chain, employment practices and environmental performance having the potential to derail its reputation. So, what is driving this increased significance of corporate social responsibility? CSR encompasses many different strands: environmental governance, ethical concerns, community and employee relations – and the drivers can differ for each of these strands. For instance, pressure from the media and investors in recent years has brought environmental sustainability to the top of the board’s agenda . A more proactive approach to corporate social purpose  may have been driven by a desire to demonstrate a commitment to social purpose to shareholders and believe that this will impart a competitive edge. This can be cited as a key reason why companies engage in corporate social responsibility.

Importance of Corporate Social Responsibility

The growing public awareness of CSR issues has led to an expectation that the companies we spend money with are “doing the right thing” regarding their social citizenship. The value of corporate social responsibility (CSR) is demonstrated when businesses’ approaches mirror their customers’ priorities. All too often, though, there remains a mismatch between public preferences and corporate performance. The Telegraph reports that in 2019, while 59% of consumers expected companies to take a stand on climate and environmental issues, only 16% of business leaders cited CSR as their top three business concerns. When looking at the importance of corporate social responsibility, the other issue to consider is the breadth of CSR and whether, as a term and a concept, it’s specific enough to hone in on the core issues you should be considering. ESG — environmental, social and governance — is a term that is increasingly being used interchangeably with CSR. But strictly speaking, the two are different. Stakeholder intelligence experts Alva sum this up nicely, noting that: “Without CSR, there would be no ESG, but the two are far from interchangeable. While CSR aims to make a business accountable, ESG criteria make its efforts measurable.” In some cases, the potential breadth of issues covered under CSR and the lack of tangible ways to measure CSR efforts have meant that companies’ corporate social responsibility initiatives have failed to achieve their potential. The number of projects that potentially fall under the CSR banner can make it difficult to manage or quantify value. Enter ESG. While ESG encompasses CSR initiatives, it also provides a clear framework, with a growing number of regulatory imperatives — more of which below — around ESG performance and reporting . Will boards’ efforts in the future move away from CSR and towards ESG? We will have to wait and see.

History of Corporate Social Responsibility

Because it has attracted increasing attention in recent years, it might be assumed that corporate social responsibility is a relatively new concept – but the belief that corporations have a responsibility towards society is not new . In fact, it’s possible to trace the history of corporate social responsibility (CSR) back through several centuries, and corporate social responsibility as a phrase has been in use since the 1950s. It’s generally accepted, though, that the basis of what we understand by corporate social responsibility today was created in 1979 when Archie B. Carroll published his “CSR pyramid,” which breaks CSR down into four areas:

• Economic responsibility
• Legal responsibility
• Ethical responsibility
• Philanthropic responsibility

Carroll’s corporate social responsibility theory is that CSR and business are not mutually exclusive but that companies must address their commercial obligations before seeking to meet ethical or philanthropic ones.

CSR Timeline

1953 Howard R Bowen publishes Social Responsibilities of the Businessman, widely viewed as the first book to comprehensively cover business ethics and social responsibility. 1970 American economist Milton Friedman publishes an article titled The Social Responsibility of Business is to Increase its Profits. The first Earth Day takes place. 1976 Founding members of the “Five Percent Club” – including Dayton Corporation (later Target) and General Mills – commit to using a proportion of their profits for philanthropy. 1984 R. Edward Freeman publishes Strategic Management: A Stakeholder Approach¸ often considered the point at which CSR became part of mainstream management theory. 1999 The first mainstream sustainable investment indices, The Dow Jones Sustainability Indices (DJSI), are launched. 2000 The United Nations Global Compact , a voluntary initiative based on CEO commitments to implement universal sustainability principles, is launched in front of 44 business CEOs and 20 heads of civil society organizations. 2000 The first full version of the Global Reporting Initiative’s Sustainability Reporting Guidelines is released. 2002 The Johannesburg Stock Exchange becomes the world’s first exchange for requiring listed companies to report on sustainability. 2011 The United Nations issues its Guiding Principles on Business and Human Rights , a global standard aimed at preventing and addressing human rights abuse risk linked to business activity. 2015 The Task Force on Climate-related Financial Disclosures (TCFD) is established to promote climate-related reporting in UK companies’ financial information. 2015 The UN’s Sustainable Development Goals are launched, emphasizing the role of business in achieving the global development agenda. 2017 Gender pay gap reporting becomes mandatory for all companies with more than 250 employees in the UK.

Role and Purpose of CSR

CSR is increasingly becoming embedded in management thinking and corporate practice. This begs the question: what is the purpose of corporate social responsibility? Is it something that boards should adopt blindly, without questioning the role of corporate social responsibility within their business? In 2015, Harvard Business Review surveyed 142 managers from Harvard Business School’s CSR executive education program. This research found that “most companies practice a multifaceted version of CSR that runs the gamut from pure philanthropy to environmental sustainability to the active pursuit of shared value.” Therefore, the role and purpose of corporate social responsibility can be a broad concept. The scope of corporate social responsibility within your organization will depend somewhat on your business’s sector, objectives, and potential impact on the environment and society. For your business, a CSR priority may be engaging with your local community and providing practical help or financial support to local causes. Or – particularly if your industry is a historic pollutant – you may prioritize environmental performance, reduce your carbon footprint, and minimize your impact. Or you may choose to focus on an issue that’s relevant to your business; diversity, inclusion, ethical supply chains – and channel your efforts into that. The wide range of themes falling under the CSR umbrella means that you have no shortage of areas to focus your CSR activities.

Challenges Facing CSR

As with all business requirements, particularly those newly adopted or growing in complexity or focus, there are challenges inherent in corporate social responsibility (CSR) strategies. While we’re moving indubitably towards a more CSR-focused business landscape, that doesn’t mean that the road towards CSR is without its bumps.

Key Challenges of Corporate Social Responsibility

1) the ability to deliver clear and transparent reporting.

Transparency around CSR-related matters is key – whether that’s your D&I strategy, your environmental approach or your human rights policy. Shareholders and stakeholders expect you to act on CSR issues and evidence your achievements candidly. In some cases, as with The UK FCA’s requirements around TCFD , this is mandated in your formal financial reporting. Increasing numbers of companies will face the challenge of delivering clear, comprehensive reporting on CSR (and wider ESG) objectives as pressure grows to document and communicate their performance.

2) A need To Define Clear Priorities and Goals

This is one of the key challenges facing corporate social responsibility strategies. Long before they can report on their successes, organizations need to identify what CSR means and how they will prioritize key actions. There are so many aspects of corporate social responsibility that this is very much an individual question for each business. There can be dissent over the focus of efforts, even within organizations.

3) Stakeholder Pressure

Sometimes, areas of focus are informed by pressure from investors and other stakeholders. Increasingly, a company’s position on CSR and ESG is a critical factor in investor decisions and customer choices. As reporting grows ever-more comprehensive, mandated and publicized, it will become easier for potential investors and buyers to make decisions based on CSR performance. Companies will face growing pressure to meet and report on their objectives.

4) Measurement of CSR Activity

When CSR began as a “nice to do,” there was less imperative to have clear and comparable measures of performance. Today, boards need not only track their performance against the CSR objectives they have set but to compare themselves to their peers and competitors. But accurate information on your own and others’ performance can be hard to pinpoint, especially in areas like executive pay, where companies can closely guard their data. Accessing centralized, consistent and reliable data can be a crucial challenge for companies wanting to measure and track their CSR efforts.

5) Making the Connection Between CSR, Value and Profitability

Businesses may adopt and expedite CSR strategies due to a genuine desire to improve their social purpose. Still, the ability to achieve “social capital” from their achievements cannot be overlooked. Communicating your ESG strategy to investors and other stakeholders, from the value of current initiatives to the potential of new opportunities, will help to realize the advantages of corporate social responsibility strategies. The effort and cost of monitoring performance across business functions, and the work involved in translating this into business metrics, can be a challenge if you are operating without an integrated approach across all your CSR and ESG programs.

Advantages and Disadvantages of Corporate Social Responsibility

It would be easy to imagine that there are only positives associated with CSR; advocates of corporate social responsibility argue that it only has upsides. But as with any business strategy, there are many aspects of corporate social responsibility. Each brings implications in terms of resource, cost and other considerations that companies should be alive to. There are arguments for and against corporate social responsibility adoption.

3 Benefits of Corporate Social Responsibility Strategies

1) improved profitability and value.

This should be one of the most welcome advantages of corporate social responsibility from the business’s perspective. Reducing waste and increasing energy efficiency doesn’t just improve the environment and your CSR credentials; it should also deliver a reduction in your costs. Therefore, there are direct benefits to CSR adoption in addition to the obvious altruistic and reputational ones. As well as lower costs, there are opportunities for greater profits. Customers proactively support businesses that share positive CSR and ESG approaches — and are prepared to pay a premium for doing so. Research from Tilburg University in the Netherlands found that consumers are ready to pay an additional 10% for products they deem socially responsible; there are clear commercial benefits of a more socially responsible strategy. 2) Improved investor relations As your CSR performance becomes known, you should enjoy improved access to capital, as investors are increasingly confident in your business. Shareholder pressure around companies and corporate social responsibility increase constantly; the expectation that corporates will adopt socially responsible policies is well-documented. It stands to reason that if you’re ahead of the game here, you will have a more harmonious relationship with all your stakeholders.

3) Ease of compliance with CSR-focused regulatory requirements

As we mentioned above, CSR and ESG are increasingly in the spotlight regarding corporate reporting. Compliance with the Task Force on Climate-related Financial Disclosures reporting requirements, for instance, will soon be mandatory in the UK and is encouraged elsewhere. A proactive CSR approach will give you a strong story to share and enable you to comply with requirements around CSR reporting. But it’s important not to downplay the challenges of implementing a CSR strategy.

4 Common Arguments Against Corporate Social Responsibility

1) the cost and challenges of implementation.

There’s no getting over that CSR costs money. CSR and wider ESG reporting require dedicated focus, demanding resources and budget. Risk-assessing your CSR approach takes time and can be a challenge. Many boards lack full oversight of the issues they need to consider — the risks faced, the board and senior team’s composition, any conflicts of interests. Once organizations identify their priorities, they need to operationalize their CSR goals, turning insights into a roadmap for action. While there are tools that can make this easier, businesses shouldn’t underestimate the time and money that an effective CSR strategy entails. For smaller organizations particularly, the resources needed can be a barrier to CSR.

2) The Fear of Opening the Organization To Scrutiny

There can also be a fear of “opening the doors” on CSR, inviting inspection of the company’s ethics, supply chain, environmental performance and philanthropy. CSR is a bit of a double-edged sword, in the sense that organizations need to promote their CSR activity to gain public approbation for it — but in doing so, open themselves up to criticism of their approach. Any communication of your achievements on corporate social responsibility emphasizes the work yet to be done. Companies may wonder whether the potential reputational damage from negative publicity around CSR is worth the work involved in devising and publicizing a corporate social responsibility strategy. Amplifying this, shareholders, stakeholders and consumers are increasingly alive to the concept of “greenwashing,” the practice of overstating environmental or other ethical credentials. An organization needs to ensure its CSR reporting is comprehensive, honest and frank about any shortcomings to avoid it being questioned and discredited.

3) Conflicting Priorities and Objectives

We talked above about the cost of implementing new corporate social responsibility approaches. Any company with shareholders has a fiduciary duty to those shareholders to maximize the company’s profits, and the CEOs of commercial enterprises tend to be tasked with improving the company’s financial performance. You could argue that corporate social responsibility and business objectives are diametrically opposed, that CSR conflicts with the fiduciary duty and CEO role by intentionally introducing costs into the business and reducing profits. Alongside the inherent costs of reporting, CSR can increase costs by requiring ethical supply chains, potentially putting companies that practice it at a commercial disadvantage. There is, then, an argument that CSR creates a conflict of interest between commercial and altruistic imperatives.

4) Limitations of CSR

As we mentioned above, CSR has limitations; its broad definition can make it difficult to put boundaries around what falls under the CSR remit. As a result, it can be hard to create a clear plan to tackle CSR: where do you focus? This can also make CSR achievements difficult to quantify. These limitations may, for some organizations, provide an excuse to avoid CSR altogether; it falls into the “too difficult” or “too vague” pile and is overlooked in favor of more tangible strategies. While it’s clear, then, that for boards, the benefits of pursuing a strategy of social responsibility and corporate citizenship are self-evident, there are considerations that need to be born in mind as well.

Corporate Social Responsibility Best Practices

For any organization aiming for good corporate social responsibility (CSR) practices, there are some recognized best practices to follow. Corporate social responsibility practices might vary from business to business, but some best practices should be universal.

Identify Your Corporate Values and Purpose

There are currently few regulatory imperatives specifically related to CSR. As a result, organizations are fairly free to decide on their own path and priorities based on their own views on the merits of corporate social responsibility. A first step might be to set some priorities, ensuring that these are in line with the things that matter to your key stakeholders — investors, customers, employees and anyone impacted by your business operations. In some cases, priorities might be obvious; if your company is a historic polluter, objectives relating to greener performance seem sensible. For other businesses, there isn’t such a direct link between CSR issues and their operations; these organizations have a freer rein when it comes to choosing issues or causes to align with.

Allocate Corporate Social Responsibility Roles and Responsibilities

It’s important to make people answerable for your CSR strategy; this will create accountability and focus attention on your aims. It’s important to make people answerable for your CSR strategy; this will create accountability and focus attention on your aims.

Depending on your organization’s size, this might be a dedicated CSR team, or it might simply mean giving key members of your leadership team-specific CSR responsibilities. It’s essential that your board and senior executives have an overview of corporate social responsibility within the business, but equally vital that responsibility should disseminate throughout the organization. Employees at all levels should have ownership of your approach to CSR and know that they play a key part. Creating a group of “champions” who can drive the CSR message throughout the organization can help here – but ultimately, the buck should stop with specific individuals who are given responsibility for achieving your goals.

Take a Business-Wide Approach

Ad-hoc or unfocused activity, while well-intentioned, won’t cut it when it comes to your corporate approach to social responsibility. One of the merits of corporate social responsibility is exactly that; that it's corporate. You should focus on harnessing the scale of your organization to create an approach that delivers more than a series of disconnected initiatives.

Communicate Internally and Externally

Shouting about your approach is essential for CSR — both to engender internal buy-in and achieve the reputational benefits of tackling your social obligations. Communicate openly and honestly about your aims and, importantly, any room for improvement. Equally important: celebrate your successes — don’t be afraid to share any achievements. And be generous with your learnings; CSR, by its very nature, should be for the greater good. If you can join any sector or cross-industry CSR groups to share approaches taken and lessons learned, do.

Benchmark Your Performance

It’s important to measure and compare your performance on CSR both internally between departments and externally with other organizations. There are some external ratings — third-party ”risk scores,” particularly for the ESG elements of CSR — which investors use to assess a company’s initiatives. You will also want to put in place your own monitoring, something that can be a challenge if your CSR data isn’t on point.

Corporate Social Responsibility Plan/Strategy

We touched in the previous section on the need for strategic corporate social responsibility and  an organized, orderly approach  rather than one comprised of disparate initiatives. What should make up this corporate social responsibility plan? CSR plans should encompass all the best practice steps outlined above, adapting them as needed to fit your organization’s circumstances. Defining your values and purpose; creating a plan that fits with your business’s core competencies; identifying the issues of importance to your stakeholders; communicating your aims and progress, and measuring and reporting on the impact of your efforts — your plan will need to include all these elements. Pursuing a strategy of social responsibility and good corporate practice needs to deliver evidence in terms of its ROI. The issue of reporting on your CSR progress deserves more exploration, so we look at that in more detail in the next section.

What is a corporate social responsibility report? It’s a formal report that evaluates the impact of your company's operations on the external community and environment. The format of your corporate social responsibility reporting may vary depending on whether it’s being produced for internal use or external scrutiny. CSR reporting might include an assessment of your organization’s economic, environmental, and/or social impacts, depending on the company’s area of operations and areas of CSR focus. Any corporate social responsibility audit you carry out will provide data on your performance against your stated objectives. The reporting is valuable internally in enabling you to measure the effectiveness of your CSR strategy and identify future priorities, and externally, in presenting your CSR credentials, aims and achievements to the world. Increasingly, some elements of CSR reporting are mandated by regulation, as with the TCFD reporting requirements we detailed earlier. We are likely to see CSR and ESG reporting becoming more of a regulatory imperative and less of a “nice to have” over time.

Corporate Social Responsibility Policies

Your corporate social responsibility policy is where you set your stall out. Examples of corporate social responsibility policies will differ between organizations, but as a general rule of thumb, your CSR policy should include: Your purpose: your CSR objectives and values. The scope of your CSR strategy — what does it encompass? The elements of your approach and the way you plan to tackle them. This might include a description of the social or environmental issue you are focusing on and the steps you will take. You may want to differentiate your regulatory obligations and any measures you choose to take proactively.

Corporate Social Responsibility Regulations and Compliance

Although it’s sometimes believed that the concept of corporate social responsibility is imposed on corporations by law, generally, this isn’t the case. Instead, it’s external pressures and the organization’s own ethical standards that set expectations around CSR. Legislation and expectations around corporate social responsibility vary by jurisdiction. Still, there is a consensus that it should be self-policed, an approach proactively led by organizations themselves, rather than something prescribed by regulation. Corporate social responsibility compliance, therefore, is something self-imposed rather than externally mandated. Investopedia describes CSR as “a self-regulating business model.” Similarly, the European Commission agrees that “it should be company led,” arguing that “EU citizens rightly expect that companies understand their positive and negative impacts on society and the environment. And, therefore, prevent, manage and mitigate any negative impact that they may cause.” This expectation isn’t confined to Europe; Forbes , describing CSR in the US, says that while CSR ‘”is a form of soft law” and “not required by US statute or regulations,” it is nonetheless “seen as obligatory by most corporations because of consumer expectations and internal norms.” The Task Force on Climate-Related Financial Disclosures encourages climate-focused reporting in companies’ financial filings, and in the UK, the financial regulator the FCA now requires that companies with premium listings on the London Stock Exchange include a statement in their annual financial report setting out whether their disclosures are consistent with TCFD recommendations and adding an explanation if they are not.

CSR Theories and Models

Many different theories underlie the development and concept of corporate social responsibility.

Milton Friedman

In 1970, American economist Milton Friedman published an essay, The Social Responsibility of Business Is To Increase Its Profits , in the New York Times. In it, Friedman set out his belief that profit must be a priority and a precursor to any social responsibility, stating that: “There is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud." Friedman’s belief, also known as the shareholder theory of corporate social responsibility, underpins many theories around corporate social responsibility.

Carroll and the Corporate Social Responsibility Pyramid

In 1979, Archie Carroll devised a four-part model of CSR: the pyramid of corporate social responsibility. The four components of the pyramid of corporate social responsibility are economic responsibility, legal responsibility, ethical responsibility and philanthropic responsibility. True CSR, Carroll posits, requires satisfying all four parts consecutively, stating that “CSR encompasses the economic, legal, ethical and philanthropic expectations placed on organizations by society at a given point in time.” Carroll believes that profit must come first; the base of the corporate social responsibility pyramid is concerned with economic success. Then comes the need to comply with relevant laws and regulations. The fourth layer of the pyramid is the need for an organization to meet its ethical duties. Then, after these three requirements are satisfied, a business can consider philanthropy.

Gray, Owens and Adams

In 1996, Carol Adams, Rob Gray and Dave Owen published Accounting & Accountability: Changes and Challenges in Corporate Social and Environmental Reporting. They present CSR approaches on a continuum, with “pristine capitalists” at one end and “deep ecologists” at the other, and all points in between representing the position of different stakeholders within an organization.

Benedict Sheehy

More recently, Sheehy, an associate professor at the University of Canberra, has become recognized as an expert on CSR, publishing research into the use of the law to “achieve long term environmental and social sustainability.” When determining their organization’s approach to CSR, boards may want to consider any or all of these theories to arrive at a CSR strategy that fulfills their corporate obligations as well as their social responsibilities.

Limitations in CSR Approaches

When boards consider how to tackle corporate social responsibility, there’s clearly much to think about. Among decisions on priorities and approaches, it’s important to consider both the importance of corporate social responsibility and its limits. We touched above on some of CSR’s limitations — particularly, the challenges of defining corporate social responsibility and finding tangible ways to measure any CSR strategy's success. The fact that social responsibility should be tailored to each business’s own activity and priorities is not only one of its strengths but can also be its weakness, making definitions and comparisons difficult. Today’s boards really need to consider ESG — which includes CSR within its auspices — rather than CSR alone. By tackling CSR within an ESG framework, it can be easier to set strategies, pinpoint specific actions, and prescribe success measures. But delivering on your ESG goals is not without its challenges. Data is the foundation on which your ESG approach is built , informing your objectives, providing the baseline for your achievements and enabling you to operationalize your ESG commitments. Many businesses, though, struggle to capture this data, leaving them in the dark when it comes to setting goals, monitoring progress and quantifying the impact of their initiatives. As a result, they are unable to capitalize on their ESG strategies’ ability to drive long-term growth and profitability. Diligent’s  ESG Solutions  are designed to help board members and executives establish clear ESG goals and operationalize them throughout the organization to ensure that every commitment leads to a measurable and enduring outcome. Take the next ESG step by creating a robust action plan to achieve and measure your goals.

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Four Elements of Successful Corporate Social Responsibility

Giving compass' take:.

• Tom Knowlton offers four structural elements needed to implement strategic corporate social responsibility programs.
• What role can you play in advancing effective CSR? Which partnerships can improve your CSR work?
•  Read more about what makes a successful corporate social responsibility plan.

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Companies with strong reputations as corporate citizens are respected for providing value to society in a comprehensive way – through their products and services, their operational excellence, and their support of the community.

As companies face increasing pressure from stakeholders to address complex societal issues, many are developing programs and initiatives with ambitious social impact goals, but often, without the requisite structure to ensure the programs are effective.

Based on interviews with seven companies exhibiting best practices, client experiences, knowledge of the sector, and TCC’s corporate citizenship framework, we’ve identified four key structural elements that can effectively guide a company in the development of their corporate citizenship structure:

• The Engagement of the CEO
• The Process of Engaging Senior Leaders
• The Role of the Corporate Citizenship Department
• The Staffing of the Corporate Citizenship Department and Functions

As companies develop their corporate citizenship approach to align with their purpose and meet increasing stakeholder expectations, their structure should also be improved to ensure effective development and delivery. Commitment by the CEO and senior leadership to integrate corporate citizenship into the operations of the company is essential.

Read the full article about corporate social responsibility  by Tom Knowlton at TCC Group.

More Articles

How corporate and ngo partnerships can usher in sustainable outcomes, stanford social innovation review, jul 9, 2021, how foundations and csr initiatives are making social change happen, sep 21, 2018.

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3.2 Components of the Strategic Planning Process

Learning objectives.

The objectives of this section is to help students …

• Explain how a mission statement helps a company with its strategic planing.
• Describe how a firm analyzes its internal environment.
• Describe the external environment a firm may face and how it is analysed.

Strategic planning is a process that helps an organization allocate its resources to capitalize on opportunities in the marketplace. Typically, it is a long-term process. The strategic planning process includes conducting a situation analysis and developing the organization’s mission statement, objectives, value proposition, and strategies. Figure 3.2 “The Strategic Planning Process” shows the components of the strategic planning process. Let’s now look at each of these components.

Figure 3.2: The Strategic Planning Process

Conducting a Situation Analysis

As part of the strategic planning process, a situation analysis must be conducted before a company can decide on specific actions. A situation analysis involves analyzing both the external (macro and micro factors outside the organization) and the internal (company) environments. Figure 3.2 “The Strategic Planning Process” and Figure 3.3 “Elements of a SWOT Analysis” show examples of internal and external factors and in a SWOT analysis. The firm’s internal environment—such as its financial resources, technological resources, and the capabilities of its personnel and their performance—has to be examined. It is also critical to examine the external macro and micro environments the firm faces,such as the economy and its competitors. The external environment significantly affects the decisions a firm makes, and thus must be continuously evaluated. For example, during the economic downturn in 2008–2009, businesses found that many competitors cut the prices of their products drastically. Other companies reduced package sizes or the amount of product in packages. Firms also offered customers incentives (free shipping, free gift cards with purchase, rebates, etc.) to purchase their goods and services online, which allowed businesses to cut back on the personnel needed to staff their brick-and-mortar stores. While a business cannot control things such as the economy, changes in demographic trends, or what competitors do, it must decide what actions to take to remain competitive—actions that depend in part on their internal environment.

Conducting a SWOT Analysis

Based on the situation analysis, organizations analyze their strengths, weaknesses, opportunities, and threats, or conduct what’s called a SWOT analysis. Strengths and weaknesses are internal factors and are somewhat controllable. For example, an organization’s strengths might include its brand name, efficient distribution network, reputation for great service, and strong financial position. A firm’s weaknesses might include lack of awareness of its products in the marketplace, alack of human resources talent, and a poor location. Opportunities and threats are factors that are external to the firm and largely uncontrollable. Opportunities might entail the international demand for the type of products the firm makes, few competitors, and favorable social trends such as people living longer. Threats might include a bad economy, high interest rates that increase a firm’s borrowing costs, and an aging population that makes it hard for the business to find workers.

You can conduct a SWOT analysis of yourself to help determine your competitive advantage. Perhaps your strengths include strong leadership abilities and communication skills, whereas your weaknesses include a lack of organization. Opportunities for you might exist in specific careers and industries; however, the economy and other people competing for the same position might be threats. Moreover, a factor that is a strength for one person (say, strong accounting skills) might be a weakness for another person (poor accounting skills). The same is true for businesses. See Figure 3.3 “Elements of a SWOT Analysis” for an illustration of some of the factors examined in a SWOT analysis.

Figure 3.3: Elements of a SWOT Analysis

The easiest way to determine if a factor is external or internal is to take away the company, organization, or individual and see if the factor still exists. Internal factors such as strengths and weaknesses are specific to a company or individual, whereas external factors such as opportunities and threats affect multiple individuals and organizations in the marketplace. For example, if you are doing a situation analysis on PepsiCo and are looking at the weak economy, take PepsiCo out of the picture and see what factors remain. If the factor—the weak economy—is still there, it is an external factor. Even if PepsiCo hadn’t been around in 2008–2009, the weak economy reduced consumer spending and affected a lot of companies.

Assessing the Internal Environment

As we have indicated, when an organization evaluates which factors are its strengths and weaknesses, it is assessing its internal environment. Once companies determine their strengths, they can use those strengths to capitalize on opportunities and develop their competitive advantage. For example, strengths for PepsiCo are what are called “mega” brands, or brands that individually generate over $1 billion in sales1. These brands are also designed to contribute to PepsiCo’s environmental and social responsibilities.

PepsiCo’s brand awareness, profitability, and strong presence in global markets are also strengths. Especially in foreign markets, the loyalty of a firm’s employees can be a major strength, which can provide it with a competitive advantage. Loyal and knowledgeable employees are easier to train and tend to develop better relationships with customers. This helps organizations pursue more opportunities.

Although the brand awareness for PepsiCo’s products is strong, smaller companies often struggle with weaknesses such as low brand awareness, low financial reserves, and poor locations. When organizations assess their internal environments, they must look at factors such as performance and costs as well as brand awareness and location. Managers need to examine both the past and current strategies of their firms and determine what strategies succeeded and which ones failed. This helps a company plan its future actions and improves the odds they will be successful. For example, a company might look at packaging that worked very well for a product and use the same type of packaging for new products. Firms may also look at customers’ reactions to changes in products, including packaging, to see what works and doesn’t work. When PepsiCo changed the packaging of major brands in 2008,customers had mixed responses.Tropicana switched from the familiar orange with the straw in it to a new package and customers did not like it. As a result,Tropicana changed back to their familiar orange with a straw after spending $35 million for the new package design.

Watch Video Clip: Tropicana’s Ad

https://www.youtube.com/watch?v=LDnkqlnhGGI

Tropicana’s ad left out the familiar orange with a straw.

Individuals are also wise to look at the strategies they have tried in the past to see which ones failed and which ones succeeded. Have you ever done poorly on an exam? Was it the instructor’s fault, the strategy you used to study, or did you decide not to study? See which strategies work best for you and perhaps try the same type of strategies for future exams. If a strategy did not work, see what went wrong and change it. Doing so is similar to what organizations do when they analyze their internal environments.

Assessing the External Environment

Analyzing the external environment involves tracking conditions in the macro and micro market place that,although largely uncontrollable, affect the way an organization does business. The macro environment includes economic factors, demographic trends, cultural and social trends, political and legal regulations, technological changes, and the price and availability of natural resources. Each factor in the macro environment is discussed separately in the next section. The micro environment includes competition, suppliers, marketing intermediaries (retailers, wholesalers), the public, the company, and customers. We focus on competition in our discussion of the external environment in the chapter. Customers, including the public will be the focus of Chapter 3 “Consumer Behavior: How People Make Buying Decisions” and marketing intermediaries and suppliers will be discussed in Chapter 8 “Using Marketing Channels to Create Value for Customers” and Chapter 9 “Using Supply Chains to Create Value for Customers”.

When firms globalize, analyzing the environment becomes more complex because they must examine the external environment in each country in which they do business. Regulations, competitors, technological development,and the economy may be different in each country and will affect how firms do business. To see how factors in the external environment such as technology may change education and lives of people around the world, watch the videos “Did You Know 2.0?” and “Did You Know 3.0?” which provide information on social media sites compared to populations in the world. Originally created in 2006 and revised in 2007, the video has been updated and translated into other languages. Another edition of “Did You Know?” (4.0) focused on changing media and technology and showed how information may change the world as well as the way people communicate and conduct business.

Watch Video Clip: Did You Know 2.0?

https://www.youtube.com/watch?v=pMcfrLYDm2U

To see how the external environment and world are changing and in turn affecting marketing strategies, watch “Did You Know 4.0?”

Watch Video Clip: Did You Know 4.0?

https://www.youtube.com/watch?v=6ILQrUrEWe8

To see how fast things change and the impact of technology and social media, visit “Did You Know 4.0?”

Although the external environment affects all organizations, companies must focus on factors that are relevant for their operations. For example, government regulations on food packaging will affect PepsiCo but not Goodyear. Similarly, students getting a business degree don’t need to focus on job opportunities for registered nurses.

The Competitive Environment

All organizations must consider their competition, whether it is direct or indirect competition vying for the consumer’s dollar. Both nonprofit and for-profit organizations compete for customers’ resources. Coke and Pepsi are direct competitors in the soft drink industry, Hilton and Sheraton are competitors in the hospitality industry,and organizations such as United Way and the American Cancer Society compete for resources in the nonprofit sector. However, hotels must also consider other options that people have when selecting a place to stay, such as hostels, dorms, bed and breakfasts, or rental homes.

A group of competitors that provide similar products or services form an industry. Michael Porter,a professor at Harvard University and a leading authority on competitive strategy, developed an approach for analyzing industries. Called the five forces model (Porter,1980) and shown in Figure 3.4 “Five Forces Model”, the framework helps organizations understand their current competitors as well as organizations that could become competitors in the future. As such, firms can find the best way to defend their position in the industry.

Figure 3.4: Five Forces Model (Porter, 1980)

Competitive Analysis

When a firm conducts a competitive analysis, they tend to focus on direct competitors and try to determine a firm’s strengths and weaknesses, its image, and its resources. Doing so helps the firm figure out how much money a competitor may be able to spend on things such as research, new product development, promotion, and new locations. Competitive analysis involves looking at any information (annual reports, financial statements, news stories, observation details obtained on visits, etc.) available on competitors. Another means of collecting competitive information utilizes mystery shoppers, or people who act like customers. Mystery shoppers might visit competitors to learn about their customer service and their products. Imagine going to a competitor’s restaurant and studying the menu and the prices and watching customers to see what items are popular and then changing your menu to better compete. Competitors battle for the customer’s dollar and they must know what other firms are doing. Individuals and teams also compete for jobs, titles, and prizes and must figure out the competitors’ weaknesses and plans in order to take advantage of their strengths and have a better chance of winning.

According to Porter, in addition to their direct competitors (competitive rivals), organizations must consider the strength and impact the following could have (Porter, 1980):

• Substitute products
• Potential entrants (new competitors) in the marketplace
• The bargaining power of suppliers
• The bargaining power of buyers

When any of these factors change, companies may have to respond by changing their strategies. For example, because buyers are consuming fewer soft drinks these days, companies such as Coke and Pepsi have had to develop new, substitute offerings such as vitamin water and sports drinks. However, other companies such as Dannon or Nestlé may also be potential entrants in the flavored water market. When you select a hamburger fast-food chain, you also had the option of substitutes such as getting food at the grocery or going to a pizza place. When computers entered the market, they were a substitute for typewriters. Most students may not have ever used a typewriter, but some consumers still use typewriters for forms and letters.

Figure 3.5: Substitute products

When personal computers were first invented, they were a serious threat to typewriter makers such as Smith Corona. (pclemens –Smith-Corona Classic 12– CC BY 2.0)

Suppliers, the companies that supply ingredients as well as packaging materials to other companies, must also be considered. If a company cannot get the supplies it needs, it’s in trouble. Also, sometimes suppliers see how lucrative their customers’ markets are and decide to enter them. Buyers, who are the focus of marketing and strategic plans, must also be considered because they have bargaining power and must be satisfied. If a buyer is large enough, and doesn’t purchase a product or service, it can affect a selling company’s performance. Walmart, for instance, is a buyer with a great deal of bargaining power. Firms that do business with Walmart must be prepared to make concessions to them if they want their products on the company’s store shelves.

Lastly, the world is becoming “smaller” and a more of a global marketplace. Companies everywhere are finding that no matter what they make, numerous firms around the world are producing the same “widget” or a similar offering (substitute) and are eager to compete with them. Employees are in the same position. The Internet has made it easier than ever for customers to find products and services and for workers to find the best jobs available, even if they are abroad. Companies are also acquiring foreign firms. These factors all have an effect on the strategic decisions companies make.

The Political and Legal Environment

All organizations must comply with government regulations and understand the political and legal environments in which they do business. Different government agencies enforce the numerous regulations that have been established to protect both consumers and businesses. For example, the Sherman Act (1890) prohibits U.S. firms from restraining trade by creating monopolies and cartels. The regulations related to the act are enforced by the Federal Trade Commission (FTC), which also regulates deceptive advertising. The U.S. Food and Drug Administration (FDA) regulates the labeling of consumable products, such as food and medicine. One organization that has been extremely busy is the Consumer Product Safety Commission, the group that sets safety standards for consumer products. Unsafe baby formula and toys with lead paint caused a big scare among consumers in 2008 and 2009.

Figure 3.6: The legal environment

The U.S. Food and Drug Administration prohibits companies from using unacceptable levels of lead in toys and other house hold objects, such as utensils and furniture. Mattel voluntarily recalled Sarge cars made in mid-2000.

As we have explained, when organizations conduct business in multiple markets, they must understand that regulations vary across countries and across states. Many states and countries have different laws that affect strategy. For example, suppose you are opening up a new factory because you cannot keep up with the demand for your products. If you are considering opening the factory in France (perhaps because the demand in Europe for your product is strong), you need to know that it is illegal for employees in that country to work more than thirty-five hours per week.

The Economic Environment

The economy has a major impact on spending by both consumers and businesses, which, in turn, affects the goals and strategies of organizations. Economic factors include variables such as inflation, unemployment, interest rates, and whether the economy is in a growth period or a recession. Inflation occurs when the cost of living continues to rise, eroding the purchasing power of money. When this happens, you and other consumers and businesses need more money to purchase goods and services. Interest rates often rise when inflation rises. Recessions can also occur when inflation rises because higher prices sometimes cause low or negative growth in the economy.

During a recessionary period, it is possible for both high-end and low-end products to sell well. Consumers who can afford luxury goods may continue to buy them, while consumers with lower in comes tend to become more value conscious. Other goods and services, such as products sold in tradition at department stores, may suffer. In the face of a severe economic downturn, even the sales of luxury goods can suffer. The economic downturn that began in 2008 affected consumers and businesses at all levels worldwide. Consumers reduced their spending, holiday sales dropped, financial institutions went bankrupt, the mortgage industry collapsed, and the “Big Three” U.S.auto manufacturers (Ford, Chrysler, and General Motors) asked for emergency loans.

The demographic and social and cultural environments—including social trends, such as people’s attitudes toward fitness and nutrition; demographic characteristics, such as people’s age, income, marital status, education, and occupation; and culture, which relates to people’s beliefs and values—are constantly changing in the global marketplace. Fitness, nutrition, and health trends affect the product offerings of many firms. For example, PepsiCo produces vitamin water and sports drinks. More women are working, which has led to a rise in the demand for services such as house cleaning and day care. U.S. baby boomers are reaching retirement age, sending their children to college, and trying to care of their elderly parents all at the same time. Firms are responding to the time constraints their buyers face by creating products that are more convenient, such as frozen meals and nutritious snacks.

The composition of the population is also constantly changing. Hispanics are the fastest-growing minority in the United States. Consumers in this group and other diverse groups prefer different types of products and brands. In many cities, stores cater specifically to Hispanic customers.

The technology available in the world is changing the way people communicate and the way firms do business. Everyone is affected by technological changes. Self-scanners and video displays at stores, ATMs, the Internet, and mobile phones are a few examples of how technology is affecting businesses and consumers. Many consumers get information, read the news, use text messaging, and shop online. As a result, marketers have begun allocating more of their promotion budgets to online ads and mobile marketing and not just to traditional print media such as newspapers and magazines. Applications for telephones and electronic devices are changing the way people obtain information and shop, allowing customers to comparison shop without having to visit multiple stores. As you saw in “Did You Know 4.0?” technology and social media are changing people’s lives. Many young people may rely more on electronic books, magazines, and newspapers and depend on mobile devices for most of their information needs. Organizations must adapt to new technologies in order to succeed.

Figure 3.7: The technological environment

Technology changes the way we do business. Banking on a cell phone adds convenience for customers. Bar codes on merchandise speed the checkout process. “first direct –first direct Banking ‘on the go’ iPhone App”

(front– CC BY-NC-ND 2.0; Paul Domenick –Lasered– CC BY-NC-ND 2.0)

 Natural Resources

Natural resources are scarce commodities, and consumers are becoming increasingly aware of this fact. Today, many firms are doing more to engage in “sustainable” practices that help protect the environment and conserve natural resources. Green marketing involves marketing environmentally safe products and services in a way that is good for the environment. Water shortages often occur in the summer months, so many restaurants now only serve patrons water upon request. Hotels voluntarily conserve water by not washing guests’ sheets and towels every day unless they request it. Reusing packages (refillable containers) and reducing the amount of packaging, paper, energy, and water in the production of goods and services are becoming key considerations for many organizations, whether they sell their products to other businesses or to final users (consumers). Construction companies are using more energy efficient materials and often have to comply with green building solutions. Green marketing not only helps the environment but also saves the company, and ultimately the consumer, money. Sustainability, ethics (doing the right things), and social responsibility (helping society, communities, and other people) influence an organization’s planning process and the strategies they implement.

Although environmental conditions change and must be monitored continuously, the situation analysis is a critical input to an organization’s or an individual’s strategic plan. Let’s look at the other components of the strategic planning process.

The Mission Statement

The firm’s mission statement states the purpose of the organization and why it exists. Both profit and nonprofit organizations have mission statements, which they often publicize. The following are examples of mission statements:

PepsiCo’s Mission Statement “Our mission is to be the world’s premier consumer products company focused on convenient foods and beverages. We seek to produce financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity (2).”

The United Way’s Mission Statement “To improve lives by mobilizing the caring power of communities (3).” Sometimes SBUs develop separate mission statements. For example, PepsiCo Americas Beverages, PepsiCo Americas Foods, and PepsiCo International might each develop a different mission statement.

• A firm must analyze factors in the external and internal environments it faces throughout the strategic planning process.
• These factors are inputs to the planning process. As they change, the company must be prepared to adjust its plans.
• Different factors are relevant for different companies.
• Once a company has analyzed its internal and external environments, managers can begin to decide which strategies are best, given the firm’s mission statement

(1) PepsiCo, Inc., “PepsiCo Brands,” http://www.pepsico.com/Company/Our-Brands.html (accessed December 7, 2009).

(2) PepsiCo, Inc., “Our Mission and Vision,” http://www.pepsico.com/Company/Our-Mission-and-Vision.html (accessed December 7, 2009).

(3) United Way Worldwide, “Mission and Vision,” http://www.liveunited.org/about/missvis.cfm (accessed December 7, 2009).

Porter, M. E.,Competitive Strategy(New York: The Free Press, 1980), 3–33.

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How to Develop a Corporate Social Responsibility Program — Part 4: Advocacy

In this episode, we discuss Part 4 of developing a Corporate Social Responsibility (CSR) strategy: finding and developing advocates. We discuss the three parts of finding internal advocates and why the other phases of research, articulate and "back-it-up" must be completed before starting this phase. We also explore where to find the most unlikely internal advocates. 

Watch and Read Part 1: Research

Watch and Read Part 2: Articulate

Watch and Read Part 3: Back It Up

Watch and Read Part 5: The Pitch

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Read what we discussed:

So today I'm joined by Nicole Campbell, CSR expert, and we're talking part four of our five-part series on developing a CSR program. And this part is called advocacy, or how to get advocacy. So Nicole, can you explain more?

Nicole Campbell:

And I think it's really important if you haven't been following step one through four to date, you might want to check that out, because [00:01:00] everything that you need to get to the point that we're at right now is covered in those sessions.

So today we are talking about advocacy, and this is a really short one, but it's more so just keeping in mind the importance of building the profile of the work that you're doing of yourself, and making sure that everyone that you're going to be pitching this to, or even working with to execute on it are in the loop, providing you with feedback and their thoughts early in the game.

Find out internal advocates

So the first thing [00:01:30] you want to do in terms of advocacy is sit down and write down who you think your internal advocates actually are.

These could be any sort of stakeholders that might be at the table when you're going to pitch this, try to have those conversations early, ask them for their feedback.

Sometimes it's just a matter of asking their executive assistant to throw 15 minutes on their calendar where you can ask them questions about what they know about CSR, what they'd like to see, those types of things.

You [00:02:00] also want to be really close with some of your key partners when you want to execute out on this once you actually get the buy-in.

So talking early to internal communications as an example, your marketing team, your sustainability teams if you have those.

And then anyone that's managing or oversees some element of employee engagement.

If you don't have an engagement team, connect with your HR folks, you really need to make sure you get these relationships going early in the game [00:02:30] and find out ways that you can benefit them.

So as an example, internal communications is going to be really important for an aspect of your program.

You should figure out if they're lagging on content, or something that you can do to help them be successful through the work that you're doing. And it's as simple as that.

And I think the last thing in terms of advocacies is making sure that you're getting the voice of your employees from all of your locations , and hearing [00:03:00] what they care about too.

Are you also creating advocates for your CSR Program?

Now, when you say advocates, obviously there'll be champions in your organization, but in this phase, do you also go out and try to change, or try to create advocates?

That is the entire phase exactly.

So I'm glad that you clarified that.

You won't be at the point of building out internal champions for your actual internal program until you've already had it approved, [00:03:30] but you need the people to be on your side, because by the time you go and actually present to get a buy-in and then actually want to implement some of these programs, you're going to need your partners.

And it's a lot easier to gain those relationships earlier than later, especially if they can put their imprint on your program or provide you early feedback before you get too far in the game.

It's super simple [00:04:00].

It’s just being conscious and intentional about building those partnerships, creating those advocates, and finding mutual benefits between the different groups and relationships that you have.

What can you give in order to get the support that you need?

But how come this is number four? Wouldn't you think yes, you do your research.

Yes, you do articulate, but wouldn't this phase be kind of more around number two or number three, rather than number four?

Advocacy phase can’t be done until all other phases completed

You'd think.

I think part of [00:04:30] the ability to gain internal support and advocates is being able to intelligently talk about what it is you want to do.

And I don't think that you can truly do that until you've done your research, you know how to back it, you know what you're solving for.

This way, when you go into a conversation, you can be like, "This is how it's solving for the business. This is what we're going to do.

These are what other people are doing."

And this is before the actual pitch to executives. All of the stuff is just ramping up to get you to that point to get that buy- [00:05:00] in.

Lining up your supporters 

Well, it's really interesting because my understanding is when you go into the back it up phase, when you go into articulate phase, you're already pitching. But I think obviously in part five, we cover pitching, which you'll see here. Who are you talking to then?

Before we get into the final phase, is this where you're essentially in line with all your people that will I guess go to [00:05:30] bat for you when you're actually doing a final pitch to leadership and executive?

So you're already starting, like you mentioned, during your research phases, you're still building those relationships, but it's a little bit more ambiguous.

You're just collecting information.

Now you're at a point where you're able to confidently share information around your value proposition and what it is you're trying to do.

Exactly. You're lining up your support before you go the big meeting when you are pitching it in a more formal [00:06:00] way.

Well, do you have anything else to add?

I don't think so. By the time you get to advocate, you should already know who those people are. I think you're going to be set if you follow all of the other steps leading up to this one.

Finding internal advocates in unlikely places

There is one question I have for you.

Have you ever found that in organizations, you find advocates in the most surprising spots? Like people you would never have guessed actually pop up and [00:06:30] become advocates?

Yeah. I've seen a couple of times some of the unlikely characters being a huge board member on a really, well-known not for profit that all of a sudden you realize, "Oh my gosh, this person loves this work. I had no idea. I was actually kind of scared of them."

So I think once you start talking to people and asking for introductions,

I tell people a lot to go to HR Business Partners, [00:07:00] because they know the business, they know the personalities of the business leaders too, and they can direct you in the right way to find those sort of surprise supporters.

So if you want to learn all the phases of how to build a CSR program, check out this playlist here , as well as this playlist for other strategies and tactics to grow and develop your CSR program .

Thanks for watching, and we'll see you in our next episode.

Watch Part 1:

Watch Part 2: 

Watch Part 3:

The Social Impact Show publishes new content weekly so check back regularly for the latest information, strategies and tips from CSR experts. 

About Nicole Campbell:

Nicole’s passion for behavioral science plays a key role in her ability to help organizations manage and adapt to change. 

Nicole has worked with companies of all sizes, industries, program varieties, and varying levels of executive support — and has had a hand in designing or growing Social Impact programs for some of the biggest brands out there. Her role, working with so many different companies, has provided her with a wealth of experience, data and anecdotes that have shaped a strong understanding of what works, what doesn’t and what’s next.

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• Published: 26 April 2023

Exploring the factors affecting the implementation of corporate social responsibility from a strategic perspective

• Chao-Chan Wu   ORCID: orcid.org/0000-0002-3891-310X 1 ,
• Fei-Chun Cheng 2 &
• Dong-Yu Sheh 1  

Humanities and Social Sciences Communications volume  10 , Article number:  179 ( 2023 ) Cite this article

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In general, the objective of a company is to pursue higher returns for its shareholders. Corporate social responsibility (CSR) is an ethical practice that seems to be contrary to the objectives of companies; as a result, companies lack sufficient motivation to implement CSR. Academics and practitioners have recently begun considering CSR from a strategic perspective. However, the definition and scope of strategic CSR have not been clearly defined or discussed in previous studies. This study uses the strategic triangle perspective as a theoretical basis to explore the key factors affecting the implementation of strategic CSR. Three main factors and ten sub-factors were summarized to form a hierarchical network structure based on a literature review. The weights of each factor and sub-factor were then prioritized using the analytic network process (ANP). The results of this study show that “company” is the most important main factor, while “corporate image”, “innovation ability”, “reputation risk”, “financial capacity”, and “investment intention” are the top five important sub-factors. The hierarchical network structure and critical factors suggested in this study contribute to implementing strategic CSR. The findings of this study will also help the theoretical development in the field of CSR.

Introduction

The purpose of businesses is to produce products or services that meet consumer demand. However, with the depletion of resources and environmental pollution, people have gradually realized the importance of sustainable development. Furthermore, with better living standards, people pay attention to social issues such as health and human rights. Various factors have led to higher expectations regarding the role of businesses in society (Huang, 2014 ). In addition to their growth, companies need to consider the overall well-being of society and make moral contributions beyond economic and legal aspects. Enterprises are not only economic entities that operate for profit but also exist to create an ideal society (Carroll and Shabana, 2010 ). Therefore, corporate social responsibility (CSR) has become an important research topic in recent years (Yuan et al., 2020 ).

The motivation for CSR implementation changes with the social environment (Bergquist, 2017 ). The goal of an enterprise is to make profits and maximize shareholder value. Thus, it is necessary to establish formal regulations to enforce the implementation of environmental protection and social issues by enterprises. Nevertheless, if CSR is merely a response to legal requirements, companies will not realize the value and benefits of this action. For organizations such as businesses that pursue economic benefits, implementing CSR may be viewed as a cost. This reactive motivation prevents companies from effectively implementing CSR (Bansal, 2022 ).

Social responsibility and corporate benefits do not conflict. This means that companies should not treat CSR as an expense incurred by contributions to fulfill public interest. Instead, companies should transform CSR from an ethical practice to one of their strategies (Porter and Kramer, 2006 ). If CSR is combined with a company’s strengths and strategies, its potential will maximize the benefits to society and the company (Branco and Rodrigues, 2006 ; Yuan et al., 2020 ). A strategic vision of CSR will allow companies to avoid seeing it as a cost or expense when implementing CSR, but will instead consider the relationship between CSR and the company’s core business and how to help the company achieve its strategic goals (Lepoutre and Heene, 2006 ; Manasakis, 2018 ). Strategic CSR can help companies achieve a win-win situation regarding economic benefits and social responsibility.

To implement strategic CSR, companies must identify the capabilities and resources that influence their social responsibility (Branco and Rodrigues, 2006 ). In addition, resources are limited to businesses, so selection and prioritization are important parts of strategic thinking (Porter, 2008 ). Identifying the key factors affecting the implementation of strategic CSR and recognizing the relative importance of these factors will help companies plan their strategic CSR activities. Therefore, it is important to explore the key factors that influence the implementation of strategic CSR. According to the strategic triangle perspective proposed by Ohmae ( 1982 ), the strategic thinking of a business is mainly based on company, customer, and competitor aspects. From the company aspect, the main description is the importance of internal resources in implementing a strategy. The customer aspect focuses on how a company uses its resources to provide attractive products and services to satisfy its customers. The principle of the competitor aspect is that a company should create as much competitive advantage as possible to enable it to compete with its competitors (Ohmae, 1982 ; van Vliet, 2009 ). The strategic triangle perspective can be used to develop a conceptual framework for strategic CSR.

This study aims to explore the key factors affecting the implementation of strategic CSR. Based on a literature review of the CSR concept and the strategic triangle perspective, this study identifies the main factors and sub-factors affecting the implementation of strategic CSR and establishes a hierarchical network structure for these factors. This study then uses the analytic network process (ANP) method to prioritize the relative weights of each factor and sub-factor in the hierarchical network structure. The results of this study contribute to determining the important factors that influence the implementation of strategic CSR to plan relevant strategies.

Literature review

This study examines the key factors influencing companies’ implementation of strategic CSR. In this section, we first review the general altruistic view of CSR. Second, the essence of corporate strategy was discussed within the framework of the strategic triangle. Then, we explain how to incorporate the strategic triangle perspective into the CSR concept to form strategic CSR. Finally, factors affecting the implementation of strategic CSR were selected to build a hierarchical network structure.

The concept of CSR

With the rise in sustainable development, CSR has become a popular topic. CSR means that enterprises are responsible for promoting social interests while pursuing their benefits (Carroll and Shabana, 2010 ; Josiah and Akpuh, 2022 ). The concept of CSR is a company’s response to social welfare and its responsibility to stakeholders affected by its development (Chang et al., 2014 ). CSR is strongly related to customers, investors, the government, and other stakeholders. Companies with social responsibility balance the needs of the company and stakeholders when making decisions so that they can contribute to society and stakeholders while pursuing profits (Hopkins, 2012 ). CSR mainly focuses on the positive actions of enterprises on social and environmental issues while paying attention to the rights and interests of stakeholders. However, it is difficult to link the ethical behavior of these companies to their own operations (Sheh, 2022 ). The traditional concept of CSR focuses on public interest but ignores the necessity of continuous profitability of companies (Matytsin et al., 2023 ). Companies must learn to integrate CSR actions into their operations rather than viewing CSR as additional philanthropy (Zollo, 2004 ). The current meaning of CSR is that companies must voluntarily incorporate social and environmental issues and interactions with stakeholders into their operations (Commission of the European Communities, 2001 ). Therefore, companies must consider both social responsibilities and operational performance, as well as their complementary strengths.

Strategic perspective and CSR

The purpose of strategy is to efficiently achieve the specific goal of an individual or organization, given the resources and capabilities. Strategic thinking integrates internal and external resources to achieve a competitive advantage in an uncertain and high-risk environment (Khalifa, 2020 ). In other words, the execution of strategy considers not only the current state within the company but also the situation of the external environment to choose the most appropriate way to achieve the goal (Hambrick and Fredrickson, 2005 ). Furthermore, Ohmae ( 1982 ) suggests a strategic triangle perspective and indicates that enterprises should focus on three factors when formulating their strategies, including the company, customer, and competitor. Companies must consider their own conditions and customer needs to provide products or services that are consistently better than those of their competitors and consider the interrelationships among the three factors.

In general, companies play a passive role in CSR implementation (Lindgreen et al., 2009 ). The main reason is that companies lack the motivation to implement CSR. The altruistic behavior of a company does not necessarily bring benefits to the company, and even the implementation of CSR conflicts with corporate profitability (Sprinkle and Maines, 2010 ). In this context, CSR is more of a moral act implemented by a company based on social expectations after making a profit. Even when CSR is linked to business operations, companies do not know how to convert it into business value and competitive advantage. If long-term investment in CSR does not give a company a competitive advantage, CSR will likely be seen as the cost of doing business. Companies tend to lack the motivation to implement CSR, which is not conducive to long-term sustainable development. In fact, companies rarely implement social responsibility purely from an altruistic perspective (Wang et al., 2016 ). The core concept of a company is to pursue performance; therefore, companies should rethink CSR through strategic thinking and select social issues or goals that enable them to fully utilize their core competencies to implement CSR (Porter and Kramer, 2006 ). In this way, companies can turn social responsibility issues into business opportunities, creating more benefits and competitive advantages (Drucker, 1984 ; Padgett and Galan, 2010 ; Manasakis, 2018 ).

Previous studies have mentioned that it is necessary to use a strategic perspective to examine CSR (Porter and Kramer, 2006 ; Wang et al., 2016 ). When thinking strategically, companies usually need to consider how they are positioned against their competitors and how they can use their resources and capabilities to achieve their goals (Porter and Kramer, 2002 ). In other words, companies must assess their internal resources and capabilities, evaluate the stakeholders and competitors involved, and develop appropriate strategies to achieve the desired CSR outcomes (Husted and de Jesus Salazar, 2006 ). Nevertheless, strategic CSR remains a relatively abstract concept requiring further exploration of its specific elements and components.

Therefore, the strategic triangle perspective can be used to establish the structure of strategic CSR and to form a precise concept. From a strategic triangle perspective, companies must take stock of their core competencies and resources, and then consider how to meet the needs of their customers. By integrating this perspective into CSR, strategic CSR can impact customers and stakeholders related to the company. Based on the above discussion, this study explicitly focuses the concept of strategic CSR on three main factors, including company, stakeholder, and competitor. The company factor refers to the resources and assets owned by the company, the stakeholder factor refers to stakeholders who interact with the business, and the competitor factor refers to the competitive advantage over competitors (Husted and Allen, 2007 ). The three main factors that affect the implementation of strategic CSR and the sub-factors within these main factors were discussed below.

From a strategic triangle perspective, the resources within a company can be considered the basis for strategy execution. According to the resource-based theory, valuable resources are the main source of a company’s competitive advantage (Barney, 1991 ). Promoting CSR is not only the responsibility of senior management or specific departments but also the recognition and participation of all employees in the company. Hence, human resources play an important role in CSR implementation (Arnaud and Wasieleski, 2014 ). Adequate professional manpower is a condition for companies to implement CSR (Meyer, 1999 ; Cohen et al., 2010 ). It ensures that sustainability-related strategies and proposals are sufficiently driven to help organizations achieve their goals and ultimately improve their effectiveness (Paillé et al., 2014 ; Voegtlin and Greenwood, 2016 ).

In addition to human resources, companies with sufficient financial resources to support the execution of operational strategies can significantly increase their likelihood of achieving their goals. Similarly, CSR implementation requires sufficient financial capacity (Branco and Rodrigues, 2006 ; Lepoutre and Heene, 2006 ). Moreover, the Fortune 500 spent $19.9 billion on CSR-related activities (Business Backs Education, 2015 ). This not only shows the importance that companies attach to CSR but also reflects that the implementation of CSR requires considerable financial resources.

On the other hand, corporate image is more abstract than other tangible resources because it is an overall performance composed of many factors related to a company (Moon, 2007 ). It is most widely defined as the reputation of a company, the overall impression of the company in the public’s minds (Agyei et al., 2014 ; Huang et al., 2014 ; Li et al., 2022 ). A great corporate image can be built based on a company’s ability, that is, the reputation that a company has built by consistently providing high-quality products or services. Thus, corporate image can also be derived from a company’s contribution to CSR (Vo et al., 2019 ). The image formed by CSR refers to the subjective feelings, attitudes, and evaluation of the public towards the social responsibility implemented by the company (Berens et al., 2005 ; Pérez and Rodríguez del Bosque., 2013 ). By engaging in charitable activities, such as protecting the environment, caring for community issues, and making charitable donations, a company can strengthen its public perception. A company’s image can be used as intangible capital for future public relations strategies to help it gain a competitive advantage.

Accordingly, human resources, financial capacity, and corporate image were adopted as sub-factors within the main factor of company in this study.

Stakeholder

In conventional business operations, a company operates by meeting its customers’ needs, and the results are ultimately reflected in its performance. As the external environment becomes more complex, the actual operation of a company will involve not only customers but also individuals or groups such as investors, media, and governments, all of whom will be affected by the company’s actions or influence its decisions (Freeman, 1984 ). In general, business strategy mainly focuses on the customer aspect, but strategic CSR affects a wider group of people than traditional strategies. According to previous studies, CSR has a significant relationship with corporate performance and stakeholder responsiveness (Alniacik et al., 2011 ; Ansu-Mensah et al., 2021 ). This means that companies can communicate with more stakeholders through CSR implementation (Manasakis, 2018 ). Several stakeholders that may influence CSR implementation, such as consumers, inventors, media, and governments, were discussed below.

First, Bhattacharya and Sen ( 2004 ) suggest that consumers consider a company’s actions towards the environment and society when making purchase decisions and state that CSR actions can increase consumers’ willingness to purchase a company’s products or services. When a company focuses on and contributes to a specific issue, consumers will likely translate their support for the issue into a willingness to buy its products (Thi et al., 2020 ; Zhang, 2022 ). Companies can choose to invest in CSR because consumers will respond to their efforts on social and environmental issues with a higher willingness to buy (Bhattacharya and Sen, 2004 ; Walker et al., 2021 ).

Second, investors must consider various factors when selecting investment targets. The reason why investors are willing to invest their capital in a company depends mainly on its profitability (Lin et al., 2018 ). Companies that contribute to CSR can manage their relationships with employees, suppliers, and other stakeholders, resulting in more stable operational and financial performance (Platonova et al., 2018 ). Moreover, companies that do not integrate environmental and social issues into their business models have a higher chance of being sanctioned by the government or law, including fines and litigation dilemmas, as well as loss of profits due to revelations of corporate misconduct or the outbreak of major industrial and environmental accidents (Brown, 1997 ). A Company that integrates CSR into its business strategy is less susceptible to negative events, convincing investors that it is a better investment target than its competitors.

Third, with the boom in information technology and media, the public has much faster and easier access to information than in the past, and both positive and negative news can be disclosed at the first opportunity (Dhëmbo et al., 2021 ; Fortunato and Pecoraro, 2022 ). The more prestigious a company, the more likely it is to receive media attention and be maliciously attacked by negative media. Companies that are good at preventing reputation risks use the media as a stakeholder to avoid damaging their reputation and improve their ability to respond to external events by voluntarily implementing CSR (Diageo, 2005 ; Unerman, 2008 ). In addition, by evaluating the results of their investments in social and environmental issues, companies can diagnose the potential risks that may arise in their operations and formulate timely improvement plans to avoid reputational damage (GRI, 2002 ).

Finally, the government is an important stakeholder that can force companies to implement CSR (Zueva and Fairbrass, 2021 ). From a strategic perspective, CSR is more than a passive response to regulatory pressure. By proactively engaging in CSR, companies can build bridges and maintain good relationships with the public sector, thereby increasing their influence on public decision-making. CSR increases trust between businesses and the government; helps companies obtain licenses, permissions, and other official documents faster and more smoothly; and avoids redundant bureaucratic costs (Mathis, 2008 ).

Based on these arguments, this study includes purchase intention, investment intention, reputation risk, and government relations as sub-factors within the main factor stakeholder in the hierarchical network structure.

According to the strategic triangle perspective, companies achieve superior financial performance by leveraging their strengths to satisfy their customers while creating a relative advantage over their competitors (Ohmae, 1982 ). In the competitor aspect, the factor that affects a company’s profitability is the price of product relative to the competitor. CSR is an important evaluation criterion for consumers when making purchases. Companies can make consumers perceive that they are concerned about social issues through CSR, which affects consumers’ perceptions of products (Bhattacharya and Sen, 2004 ). Even though not everyone is willing to pay a higher price for the products of companies that implement CSR, for advocates of social and environmental issues, paying a price premium can symbolize their concern and support for a particular issue and serve as a reward for responsible companies (McGoldrick and Freestone, 2008 ). Accordingly, companies can use this feature to set higher product prices (Danko and Nifatova, 2022 ).

Companies that have already established positions in a specific industry must protect themselves from potential competitors and maintain their market share. From a traditional strategic perspective, companies usually adopt cost-cutting strategies to take advantage of price wars to defeat competitors or invest more resources in research and development to build barriers to entry into the industry (Porter, 2008 ). Furthermore, Buccella and Wojna ( 2017 ) suggest that incumbent companies in the industry can regard CSR as a moat against potential competitors and turn it into a weapon to maintain their market position.

On the other hand, a company’s growth is driven by the continuous development of new products or the improvement of existing business models. Innovation ability has become one of the most important strategic considerations in companies’ decisions (Chkir et al., 2021 ). Innovation ability is the driving force behind the implementation of CSR if companies can integrate CSR thinking into their products (Padgett and Galan, 2010 ). Companies that implement CSR are better able than their competitors to use efficient processes for product development and manufacturing (Husted and Allen, 2007 ).

Based on the above points, this study summarizes price premium, entry barrier, and innovation ability as sub-factors within the main factor competitor.

Methodology

The hierarchical network structure.

When applying ANP, the decision problem needs to be clearly structured, and the interrelationships between the factors must be presented in a network manner. The hierarchical network structure can be established mainly through the literature review and the opinions of experts in the field, which contains goal, main factors, and sub-factors (Saaty, 2005 ). This goal indicates that a decision problem must be resolved. The main factors, sub-factors, and interdependencies among factors can be obtained by reviewing the literature and collecting expert opinions on the decision problem (Saaty, 2004 ).

This study aims to identify the factors that may affect the implementation of strategic CSR. Based on the literature review, three main factors and ten sub-factors were obtained to construct the hierarchy. The main factors contain company, stakeholder, and competitor. Company consists of three sub-factors, including financial capacity, human resources, and corporate image. Stakeholder has four sub-factors, including purchase intention, investment intention, reputation risk, and government relations. Competitor has three sub-factors, including entry barrier, price premium, and innovation ability. Then, this study collects expert opinions on the interdependence of factors through questionnaires to form a network structure based on Ngeru et al. ( 2011 ). To ensure that the experts are sufficiently professional and to improve the quality of the data collected, they were selected from among professionals with experience in the field of CSR. A total of twelve experts have an average of 10 years of experience in public relations, consulting, manufacturing, and financial industries, and they are all engaged in CSR-related work in these industries. Twelve questionnaires were distributed and collected, with a 100% return rate. Finally, a hierarchical network structure, including the interrelationships among factors, was established, as shown in Fig. 1 . The operational definitions of the three main factors and ten sub-factors were described in Tables 1 and 2 .

It includes three main factors, ten sub-factors, and the interdependence of factors.

The procedure of ANP

ANP is a scientific approach to decision-making when factors have dependencies and feedbacks, and is an extension of analytic hierarchy process (AHP) (Saaty, 2004 ). One of the assumptions of AHP is that the factors are independent of each other (Stein and Ahmad, 2009 ). However, in reality, many decision problems cannot be structured hierarchically because elements in the hierarchy involve many interactions and interdependencies. Therefore, the structure of ANP usually includes many networks of elements with interdependent relationships, which makes analysis results more realistic (Lee and Lee, 2012 ). The reason for adopting ANP in this study is that it addresses the complexities of implementing strategic CSR and provides best possible outcome for decision-making. The specific steps of ANP were shown as follows (Chung et al., 2005 ).

Step 1: Constructing the pairwise comparison matrix

In this step, a series of pairwise comparisons were conducted to determine the relative importance of factors. Paired comparisons are two-by-two comparisons of factors based on ANP questionnaire, which uses a scale of one to nine as proposed by Saaty ( 2005 ). As shown in Table 3 , a score of 1 means that two factors are equally important to each other, while a score of 9 means that one factor is extremely important compared to the other. And then, the experts in the given field were asked to judge the relative importance between factors in the questionnaire.

The pairwise comparison matrix was obtained by the judgments of experts using ANP questionnaire. If pairwise comparison matrix M is an n  ×  n matrix, then n ( n  − 1)/2 ratings should be calculated. The matrix M was established as below (Saaty, 2004 ).

where b ij is the comparison value of factor i and factor j for one expert, b ij  > 0; b ji  = 1/ b ij ; i, j  = 1, 2,…, n .

Step 2: Calculating priority vector and eigenvalue

The priority vector (also called eigenvector) and eigenvalue of each pairwise comparison matrix in ANP can be derived as in AHP by solving the following formula (Saaty, 2005 ).

where M represents a pairwise comparison matrix, w is the priority vector (eigenvector), and λ max is the largest eigenvalue of M . The priority vector w and the eigenvalue λ max can be computed by the following sub-steps (Al-Harbi, 2001 ).

Step 2-1: Dividing each comparison value of matrix M by the sum of its column to produce the normalized pairwise comparison matrix.

Step 2-2: The priority vector w can be calculated by dividing the sum of each row in the normalized pairwise comparison matrix by the number of factors in the matrix.

Step 2-3: Firstly, multiplying matrix M by priority vector w to generate the vector Mw . And then, divide the values of the vector Mw by their respective values of priority vector. Finally, the eigenvalue λ max can be calculated by averaging the values generated above.

Step 3: Consistency test

The consistency test must be implemented to ensure that there are no logical fallacies in the judgments. The consistency index (CI) and consistency ratio (CR) can be utilized to check the consistency of each matrix. The CI was formulated as follows (Saaty, 2005 ).

where n is the number of factors.

And then, the CR of each matrix can be computed as below (Saaty, 2005 ).

where the random index RI represents the random consistency of various size of matrices. The values of RI were shown as Table 4 . If CR is less than a threshold value, then the matrix has acceptable consistency. The thresholds value proposed by Saaty ( 2005 ) is 0.1.

Step 4: Building the supermatrix

To address the dependencies between factors in the research framework, ANP uses supermatrix to calculate the relative weights of factors. A supermatrix consists of a combination of sub-matrices, each of which contains dependencies of elements within each cluster and is compared cross-cluster with elements from other clusters. If there is no correlation between the elements, the pairwise comparisons in the sub-matrices are equal to zero (Saaty, 2005 ). In this study, the main factors represent clusters and the sub-factors represent elements.

As shown in Eq. ( 5 ), W ij is the eigenvectors generated by comparing the element in cluster i with the element in cluster j . If the cluster j has no effect on the cluster i , the value is equal to zero. The structure of supermatrix is generated based on this logic (Saaty, 2004 ).

The standard form for a supermatrix was shown in Eq. ( 6 ) (Saaty, 2004 ). In general, each column of this matrix is not normalized or equal to one, which makes this matrix an unweighted supermatrix.

where C h is the cluster of a decision system; h  = 1, 2,…, n , and each cluster h has m h elements, denoted by e h 1 , e h 2 ,…, e hmh .

The supermatrix needs to be column-stochastic in order for convergence to occur. To achieve this, the weighted supermatrix W’ was established after the normalization (Saaty, 2004 ). Furthermore, it is necessary to raise the weighted supermatrix to exponential powers in order to reach stabilization or convergence. The resulting matrix is called limit supermatrix W limit , as shown in Eq. ( 7 ) (Saaty, 2005 ). The form of limit supermatrix is the same as the weighted supermatrix, but each column of the limit supermatrix is the same. Finally, the global weight of each factor can be obtained in the limit supermatrix.

where k is an arbitrarily large number.

This study examines the important factors for companies to implement strategic CSR. As companies consider many aspects in practice, and each factor may be related, ANP was used to obtain the relative weight of each factor. The weights of factors in the hierarchical network structure were generated according to the steps proposed in the methodology section.

In step 1, a series of pairwise comparisons were conducted to construct pairwise comparison matrices. Paired comparisons are two-by-two comparisons of factors based on ANP questionnaire using the scale of 1 to 9 shown in Table 3 . The experts were asked to make three levels of pairwise comparisons in the questionnaire, including the comparisons between main factors, comparisons between sub-factors within each main factor, and comparisons of dependencies for main factors or sub-factors. A total of fifteen experts working in the field of CSR were selected to fill out the questionnaire. These experts have an average of 12 years of CSR-related experience, with ten from industry and five from academia, as shown in Table 5 . After collecting fifteen questionnaires, the data were imported into Excel to form the pairwise comparison matrix of each expert. Next, the pairwise comparison matrices of fifteen experts were integrated into the aggregated pairwise comparison matrices using the geometric mean method, and then imported into Super Decisions V3.2 software for subsequent analysis. Table 6 presents the aggregated pairwise comparison matrix of main factors. Table 7 , Table 8 , and Table 9 describe the aggregated pairwise comparison matrices of sub-factors within each main factor, respectively.

In step 2, the priority vector and eigenvalue λ max of each pairwise comparison matrix was computed by Eq. ( 2 ) using Super Decisions V3.2 software. And then, CR value of each matrix was calculated by Eqs. ( 3 ) and ( 4 ) in step 3. The priority vector and CR value for each matrix was also shown in Table 6 , Table 7 , Table 8 , and Table 9 . Since all CR values are less than 0.1, the consistency of each matrix is acceptable (Saaty, 2005 ). Finally, the limit supermatrix was generated based on Eqs. (6) and ( 7 ) in step 4 and shown in Table 10 . Considering the dependencies among factors and sub-factors, the global weights of sub-factors were computed using Super Decisions V3.2 software.

Table 6 shows the relative importance of three main factors without considering dependencies. “Company” has the highest weight (0.4992), “stakeholder” has a weight of 0.3310, and “competitor” has a weight of 0.1698. Tables 7 to 9 present the relative importance of sub-factors within the main factors of company, stakeholder, and competitor, respectively, regardless of the dependencies. In the “company”, the sub-factor “financial capacity” possesses the highest weight (0.4650). Within the main factor “stakeholder”, “purchase intention” is the most important sub-factor (0.4125). In the main factor “competitor”, the most critical sub-factor is “innovation ability” (0.4783).

The global weights of sub-factors were listed in Table 11 . “Corporate image” has the highest weight (0.1779), followed by “innovation ability” at 0.1653, while “reputation risk”, “financial capacity”, and “investment intention” also have higher weights at 0.1282, 0.1264, and 0.1237, respectively. These five sub-factors are key elements that companies need to consider when implementing strategic CSR. In addition, the three sub-factors at the “company” level account for 0.4028 (0.1264 + 0.0985 + 0.1779) of the global weights. The weights of sub-factors in the “stakeholder” adds up to 0.3766 (0.0944 + 0.1237 + 0.1282 + 0.0303). It can be seen that main factors “company” and “stakeholder” account for nearly 80% of the weight, and these two factors have a significant impact on the implementation of strategic CSR.

This study aims to identify the key factors affecting the implementation of strategic CSR. First, the main factors and sub-factors affecting the implementation of strategic CSR were selected based on a literature review. Subsequently, a hierarchical network structure was constructed for these factors. The ANP method was then utilized to prioritize the relative weights of each main factor and sub-factor in the hierarchical network structure. Based on the results of analysis, this section discusses three aspects of company, stakeholder, and competitor.

“Company” has the highest weight among all main factors in this study. In this main factor, “corporate image” and “financial capacity” are among the top five sub-factors with the highest weights. Primary, “corporate image” has the highest weight among all sub-factors. This finding confirms previous research that corporate image is an important factor related to CSR (Arendt and Brettel, 2010 ; Vo et al., 2019 ). The public’s overall opinion of a company is key to its sustainable operation, and intangible assets such as corporate image can provide the basis for strategic planning. Therefore, building a corporate image is an inevitable incentive for operators when planning CSR strategies.

Furthermore, “financial capacity” is ranked fourth in weighting among all sub-factors. This highlights that the financial resources available to companies impact the implementation of strategic CSR. The result is consistent with previous studies that have made similar arguments about CSR, company size, and financial situation (Branco and Rodrigues, 2006 ; Choi et al., 2018 ). Large enterprises typically have more resources, stable financials, and mature business models than start-ups; therefore, they do not need to worry about the impact of implementing CSR on their financial performance, and their solid foundation increases the likelihood that they will invest in CSR (McGuire et al., 1988 ; Brammer and Millington, 2006 ). Companies should reserve appropriate budgets for CSR strategies in advance according to their financial situation and formulate corresponding CSR strategies based on the available resources.

External groups are one of the factors that influence companies when planning CSR strategies. In this study, “stakeholder” is given secondary weight in all main factors. Among all sub-factors, “reputation risk” within the main factor “stakeholders” has the third highest weight, indicating that companies view CSR as a way of risk management. Avoiding reputational damage is one of the main motivations for enterprises to implement CSR (Branco and Rodrigues, 2006 ; Choi et al., 2018 ). The reason is that if a company’s long-established reputation is destroyed by media coverage, it will cause a great loss to the company. The best way to deal with this risk is to review and improve the company’s negligence in business processes through CSR so that the media cannot criticize the company’s reputation.

“Investment intention” has the fifth highest weighting of all sub-factors. This indicates that when a company pursues its CSR outcome, it is expected to be seen by investors as a company with greater growth potential and ultimately creates higher value for shareholders. This feature allows companies to obtain more capital from investors to support their operational activities and strategic planning (Malik, 2015 ). In fact, CSR investment has already made its mark on the financial market. Investors prefer to invest in responsible companies (Brown, 1997 ; Msiska et al., 2021 ).

Corporate strategy aims to gain a competitive advantage. The second highest weight is given to “innovation ability” among all sub-factors. The result supports the idea that a company’s ability to innovate helps implement CSR strategies and develop more business opportunities by considering the connection to environmental and social issues (Husted and Allen, 2007 ; Padgett and Galan, 2010 ). There is already a precedent for companies combining corporate innovation with social responsibility. Toyota launched a range of innovative vehicles with hybrid fuel and electric engines to address growing environmental concerns and vehicle emissions through product innovation (Iyer and Soberman, 2016 ).

Conclusions

This study integrates the strategic triangle perspective with the concept of CSR to generate strategic CSR and identify the key factors that affect the implementation of strategic CSR. The strategic CSR proposed in this study emphasizes that companies should take the initiative to integrate social responsibility with their own goals and core business while considering internal resources, stakeholders, and the competitive environment to formulate the most appropriate strategic plan. This enables companies to achieve their strategic goals while fulfilling CSR.

This study has several important managerial implications. First, by integrating strategic thinking into CSR, the scope of social responsibility is not only to fulfill the civic duties of enterprises to benefit society but also to maintain relationships with stakeholders and gain competitive advantages. Second, the hierarchical network structure proposed in this study can help CSR practitioners think about strategic CSR from a holistic perspective so that the concept of CSR can be better integrated into business strategies and become an issue to be considered when companies conduct strategic planning.

Third, the findings of this study will enable CSR practitioners to understand the relatively important factors that influence the implementation of strategic CSR and to invest resources and effort in areas related to these key factors. This enables strategic CSR to be implemented more efficiently and ultimately has the greatest impact. Finally, these results help companies comprehend how the implementation of CSR relates to their own goals and performance, and the benefits it can bring them. In this way, CSR will no longer be seen as a cost or expense but as a strategy that can help companies achieve their goals. From this perspective, companies will be more motivated than ever to fulfill their CSR, leading to better social and economic development.

Concerning its methodological contributions, the ANP method has some advantages. Primarily, ANP is an appropriate technique for solving multi-criteria decision-making problems in which there are dependencies among factors. This can simplify complex problems and effectively identify the key factors that affect the implementation of strategic CSR. Next, by applying the ANP method, which combines both qualitative and quantitative information, a precise hierarchical network structure was proposed to systematically examine these factors. Finally, because ANP uses pairwise comparisons derived from the judgments of experts, accurate weights of the main factors and sub-factors can be generated based on professional considerations.

Nevertheless, this study has some limitations that should be examined in future research. Primarily, the main factors and sub-factors were selected from the literature review, which may have confined the range of factors that could be selected. Future research could combine a literature review with other methods, such as focus group, nominal group technique, and in-depth interviews, to identify additional factors. Furthermore, this study uses ANP as a single method to establish a hierarchical network structure for determining the key factors influencing strategic CSR implementation. Future research could further consider the ambiguity associated with the judgments of experts and incorporate fuzzy numbers into the ANP method to evaluate the relative weights of factors.

Data availability

The datasets generated during and/or analyzed during the current study are available from the corresponding author on reasonable request.

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Wu, CC., Cheng, FC. & Sheh, DY. Exploring the factors affecting the implementation of corporate social responsibility from a strategic perspective. Humanit Soc Sci Commun 10 , 179 (2023). https://doi.org/10.1057/s41599-023-01664-4

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Integrating CSR with Business Strategy: A Tension Management Perspective

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Integrating corporate social responsibility (CSR) into a for-profit organization’s business activities is fraught with tensions. This paper reports a case study of a construction company, exploring how different tensions emerged to challenge company-level aspirations for strategic CSR integration. The study identifies three types of persistent CSR tensions and four management practices, discussing how the management practices led the organization to navigate CSR tensions in both active and defensive ways. Furthermore, the study explicates why the case company succeeded in integrating CSR into formal business strategy and shared attitudes but struggled with CSR integration in the domain of day-to-day operations. The paper contributes to the CSR literature by developing a tension-centric perspective on CSR development. It highlights the necessity of tension navigation at both the organizational and the action levels, the key role of active (as opposed to defensive) navigation of CSR tensions, and the importance of alignment between organizational and action levels in navigating tensions for sustaining strategic focus on CSR over time.

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Introduction.

With a growing emphasis on corporate social responsibility (CSR), companies must decide how to integrate CSR into their organizational strategy. For most companies, CSR has been a tool for improving business performance (e.g., Lindgreen et al. 2009 ; Weaver et al. 1999a ) through initiatives that are unconnected with the business strategy, such as charities or PR programs (Husted 2003 ; Weaver et al. 1999b ). While enabling the cultivation of external legitimacy (e.g., Crilly et al. 2012 ), the problem with such a peripheral approach to CSR is that it may not generate the best societal or business outcomes (Halme and Laurila 2009 ). An integrated approach is needed instead, which integrates CSR into the company’s day-to-day activities, core competencies, shared understandings, and strategic decisions (Aguinis and Glavas 2013 ; Basu and Palazzo 2008 ; Brooks 2005 ).

The integrated approach to CSR is essential for leveraging the potential synergies between social and business agendas (e.g., Gao and Bansal 2013 ), but calls for companies to embed CSR into organizational culture (Maon et al. 2010 ) and view it as an opportunity for innovation (Porter and Kramer 2006 ). Given the contradictions between economic and societal demands (Margolis and Walsh 2003 ), companies attempting to integrate CSR into their business strategy and operations also expose themselves to internal CSR tensions that require systematic managerial attention (Hahn et al. 2015 ; Ozanne et al. 2016 ; Smith et al. 2013 ). Thus, tension management becomes crucial for the integration of CSR into business strategy (Hahn et al. 2015 ).

However, despite insightful conceptual studies, we continue to have a limited understanding of the management of CSR tensions during the strategic CSR integration process (Hahn et al. 2018 ; Maon et al. 2010 ). To fill this gap in the knowledge, we investigated the management of CSR tensions during a strategic CSR integration process through a qualitative single-case study in a European construction company, “SmartCo.” Since 2009, SmartCo has undergone a radical strategic transition that placed CSR and ethical values at the center of its business strategy. While the transition allowed SmartCo to challenge the construction industry’s adverse contracting practices, its focus on short-term value, and the widespread involvement in the black economy, it also generated a variety of internal CSR tensions that called for managerial efforts to allow the organization to balance between business and CSR targets.

By investigating the navigation of CSR tensions at SmartCo, this study makes three main contributions to the CSR literature. First, it improves our understanding of the nature of CSR tensions at the core of the CSR development process, as well as the various management practices that allow companies to address the CSR tensions. Second, this study develops new knowledge of the ways in which tension management contributes to strategic CSR integration. Identifying recognition and evasion as ways of navigating tensions at the organizational level, as well as adjustment, confrontation, and regression at the action level, the findings highlight the crucial role of active as opposed to defensive navigation of CSR tensions, and call for alignment in navigating the tensions across the organization. Third, this study extends the predominantly conceptual work on the tension-based integrative view of CSR. Specifically, our work deepens the understanding of the role of management’s interventions for supporting the navigation of persistent CSR tensions.

This article is structured as follows. We begin by establishing the theoretical background of this study by distinguishing peripheral from integrated approaches to CSR, and by positioning persistent tensions as the core challenge of strategic CSR integration. We then describe our empirical inquiry of SmartCo and explain the analytical process of our qualitative study. Thereafter, we present our findings on the management of CSR tensions, and synthesize the findings to explain how the navigation of CSR tensions through active and defensive means contributed to strategic CSR integration. We conclude by situating our contributions within the CSR development literature, emphasizing the navigation of CSR tensions as a central element in strategic CSR integration, along with providing implications for managers, and describing the limitations and potential avenues for future research.

Literature Review

From peripheral csr to strategic csr integration.

A widely accepted premise in CSR literature is that companies have societal and environmental obligations that go beyond shareholder interests and legal compliance. Besides this premise, however, the perspectives taken to CSR vary significantly (e.g., Basu and Palazzo 2008 ; Carriga and Mele 2004 ; Lantos 2001 ; McWilliams et al. 2006 ), including the definition of CSR and its distinction from related concepts such as corporate sustainability (Bansal and Song 2017 ; Montiel 2008 ). Here, we align with Carroll’s ( 1979 ) view of CSR as embodying the economic, legal, ethical, and discretionary obligations a business has to society. In addition to emphasizing CSR as going beyond minimum legal requirements, Carroll ( 1979 ) provides a conceptual basis for analyzing the differences between companies regarding the social issues they address, as well as their responsiveness to these social issues (see also Lindgreen et al. 2009 ; Weaver et al. 1999a ). This is important because the outcomes of CSR initiatives depend on their implementation (Halme and Laurila 2009 ).

In this paper, we foreground the distinction between a peripheral and integrated approach to implementing CSR (e.g., Aguinis and Glavas 2013 ; Weaver et al. 1999b ). Companies that have adopted the peripheral approach to CSR separate the activities and initiatives focused on social issues from the core business activities to satisfy external expectations. For example, companies may outsource CSR through charitable contributions or other forms of philanthropy (Husted 2003 ), which enables them to garner external legitimacy while maintaining an internal focus on core business processes and financial performance (Halme and Laurila 2009 ). Such CSR activities are driven by external incentives and specific stakeholder pressures (Weaver et al. 1999b ; Wheeler et al. 2002 ). For this reason, they often produce fragmented CSR activities that lack internal consistency (Yuan et al. 2011 ) and consequently fail to positively impact either the business or societal outcomes of the company (Porter and Kramer 2002 , 2006 ).

In contrast, the integrated approach incorporates CSR into the organization’s core activities, structures, and policies (Aguinis and Glavas 2013 ; Weaver et al. 1999b ; Yuan et al. 2011 ). While more complicated than the implementation of peripheral initiatives, due to the need to legitimate CSR as an essential part of the company (Smith et al. 2013 ), the integrated approach may enable companies to improve their economic and social performance by tapping into the synergies between business and societal agendas (Gao and Bansal 2013 ; Halme and Laurila 2009 ). In this paper, we focus specifically on strategic CSR integration , which we define as an organization-wide change process that integrates CSR not only into the company’s day-to-day activities, routines, and policies (Brooks 2005 ), but also into its strategic decision-making, core competencies (Aguinis and Glavas 2013 ), and organizational culture (Jones et al. 2007 ; Maon et al. 2010 ). The moral development of a company’s culture (e.g., Reidenbach and Robin 1991 ) plays an important part in strategic CSR integration because it has a constitutive impact on how the company perceives its environment and balances between stakeholder expectations and business demands (Basu and Palazzo 2008 ; Hahn et al. 2014 ). In addition, culture directs how the organization operationalizes its strategy into specific policies and practices (Berger et al. 2007 ), how responsive and open it is to stakeholder demands (Jones et al. 2007 ), and how it builds relationships among internal and external stakeholders (Brickson 2007 ).

Strategic CSR integration involves multiple intermediary stages between rejecting CSR and embedding it into strategy and organizational culture (e.g., Mirvis and Googins 2006 ; Reidenbach and Robin 1991 ). For example, in their synthesis of the CSR development literature, Maon et al. ( 2010 ) identify three cultural phases and seven stages in the integration of CSR, which involve distinct patterns across the organizational dimensions of shared knowledge and attitudes, strategy, and day-to-day operations. Each stage also requires its own organizational patterns in relating business and CSR (Yuan et al. 2011 ), and introduces distinct managerial demands. For example, the integration of CSR through a code of ethics may draw management attention to sanction misbehavior and create struggles with the empowerment of employees. In contrast, the integration of CSR into the company’s values may require efforts to counter internal disagreements and the abuse of autonomy by influential individuals (Rossouw and van Vuuren 2003 ).

Although the literature on CSR development informs us about the stages and organizational dimensions of strategic CSR integration, there is much less research on how firms manage this transition (for exceptions, see Ingham and Havard 2017 ; Maon et al. 2009 ). Empirical literature has notably overlooked the trade-offs and tensions in strategic CSR integration (Hahn et al. 2010 ; Van der Byl and Slawinski 2015 ), which derive from the incompatibility between economic and social targets (Margolis and Walsh 2003 ). While latent when integrated peripherally, strategic CSR integration exacerbates these tensions by forcing the organization to strive for both goals simultaneously in its core processes (e.g., Hahn et al. 2015 ; Ozanne et al. 2016 ; Smith et al. 2013 ). For example, attending simultaneously to social and economic demands exerts a continuous tension on the sensemaking of top management as it increases the number and complexity of decision-making attributes (Hahn et al. 2014 ). Moreover, combining economic and social performance in inter-organizational relationships, organizational structures, competences and day-to-day activities entails the coexistence of incompatible principles and practices that potentially undermine strategic CSR integration (Basu and Palazzo 2008 ; Scherer et al. 2013 ; Smith et al. 2013 ). Hence, to understand the process of strategic CSR integration, we must focus on the management of CSR tensions.

A Tension Management Perspective of Strategic CSR Integration

CSR tensions are intra-organizational tensions that arise from efforts to implement the ideas, policies, and practices associated with CSR simultaneously with the pursuit of business targets. The literature offers various perspectives on CSR tensions. For example, the paradox perspective (e.g., Smith and Lewis 2011 ) suggests that CSR tensions arise from competing goals and strategies between CSR and business (performing tensions), competing organizational designs (organizing tensions), divergent identities among organizational groups regarding their adherence to social responsibility (belonging tensions), and different temporal horizons and demands of change between business and CSR (learning tensions). Each dimension entails distinct demands for tension management (Ozanne et al. 2016 ; Smith et al. 2013 ).

Alternatively, Hahn et al. ( 2015 ) discuss CSR tensions in terms of level, change, and context. In their conceptualization, the tensions of level derive from the different connotations of sustainability at the individual, firm, and systemic levels. For example, what seems an appropriate response to a social issue for an individual may contradict organizational-level CSR goals. Tensions of change, in turn, originate in the changes required by strategic CSR integration. Here, contradictions may arise in selecting the most urgent domain for change, or in deciding how the organization should effect change. Finally, tensions of context are caused by contradictions between the short-term view of economic decision-making, and the global externalities and long-term implications of these decisions. For instance, they pertain to justifying strategic investments into CSR agendas that have considerably longer time frames and higher uncertainty than business investments.

The literature outlines two approaches to managing CSR tensions (Van der Byl and Slawinski 2015 ). In one approach, a company may seek to avoid the tensions altogether, either by prioritizing business targets (“trade-off”) or by selecting the elements of CSR so that they don’t interfere with business performance (“win–win”). Keeping CSR peripheral, this strategy limits the attainable societal benefits but may allow the organization to garner external legitimacy for its CSR programs (de Jong and van der Meer 2015 ). In the other approach, a company may strive for deeper integration between social and economic targets without favoring one over the other. This approach requires the company to purposefully embrace the ensuing tensions as inherent parts of its commitment to responsible business (Gao and Bansal 2013 ), and to find ways to balance or reconcile those tensions through separation or synthesis (Hahn et al. 2015 ).

The overarching challenge with the latter is that the CSR tensions persist over time and make actions by one set of principles difficult (e.g., Poole and Van de Ven 1989 ; Putnam et al. 2016 ; Smith and Lewis 2011 ). In response, companies need efforts both at the organizational and action levels to legitimize and balance CSR with business targets (Hengst et al. 2020 ). For example, at the organizational level, new capabilities are needed to defuse the tensions associated with a responsible business (Ivory and Brooks 2018 ; Vallaster et al. 2019 ), along with new hybrid structures and support systems (Smith et al. 2013 ). At the action level, decision-makers need to adopt complex rationales and decision-making frames to deal constructively with the tensions (Hahn et al. 2014 ), and contradictory policies and managerial practices may be needed to advance CSR and business goals simultaneously (Scherer et al. 2013 ).

While providing insights into the nature and resolution of CSR tensions, the conceptual nature of the CSR tension literature calls for a careful empirical investigation of the practices through which CSR tensions are managed in strategic CSR integration (e.g., Van der Byl and Slawinski 2015 ). Thus, the rest of this paper explores the management of CSR tensions during the strategic CSR integration process.

Research Methods

To advance the research on strategic CSR integration, we conducted a qualitative single-case study on “SmartCo,” a medium-sized construction company in Finland. We examined SmartCo’s change process from 2009 to 2017, during its transformation from a business-focused company with fewer than 30 employees to a company that defined its business strategy through ethical values and that employed nearly 300 people. This growth was driven by a succession of cumulative strategic changes, which shaped both SmartCo’s business visions and its strategic commitment to CSR (see Table 1 ). Hence, unlike a planned change initiative in a large organization (e.g., Ingham and Havard 2017 ; Maon et al. 2009 ), SmartCo offers unique insights into an organic change process through which ethical values came to define the company’s identity and business strategy, as well as its efforts to advocate CSR through its core business practices.

The change process began in 2009 with the appointment of a new CEO who redefined the company’s business strategy as “service construction,” and set out to rectify industry-wide issues with poor quality, lack of transparency, and adversarial relationships with emphasis on building long-term collaboration with customers and other stakeholders. Although CSR was not yet explicitly on the strategic agenda, the strategy made SmartCo more sensitive to its immediate stakeholders (clients, sub-contractors, users). In 2012, SmartCo’s commitment to CSR was made explicit with the introduction of ethical values and the adoption of a formal code of ethics in the wake of a publicized case of bribery in one of SmartCo’s construction projects.

From 2014 onwards, SmartCo started to explicate its strategy by practicing the ethical values of transparency, trust, and responsibility. Instead of being isolated from strategic objectives, these values were evoked in communications regarding the company’s strategic visions and adopted by organization members as a basis for making sense of their shared organizational identity. Furthermore, the creation of new business units (focused on the development of new housing and service concepts) and internal ventures (focusing on digital solutions as basis of new collaboration models) helped embed the ethical values and society-improving mission into business development. For example, one internal venture set out to build a platform for resident communities to facilitate interaction, sharing, and co-living as solutions to the unwanted effects of urbanization and rising costs of living.

When reflected against the organizational dimensions of CSR development (Maon et al. 2010 ), evident changes unfolded during the study period, which makes SmartCo a relevant case for investigating strategic CSR integration. In the dimension of shared attitudes and understandings, SmartCo shifted from ignoring CSR to perceiving the ethical values as central to its existence. With formal strategy, the company moved from a narrow customer focus to define the ethical values and principles as the basis of competitive advantage, and implemented this strategy through new business units and internal ventures. In the operational dimension, SmartCo effected a formal code of ethics, which provided a common policy and guideline for behavior in accordance with the company’s values.

In addition, SmartCo is a compelling case due to its industry setting, which is fraught with ethical issues, such as adversarial contracting practices, lack of transparency, short-term value focus, and widespread problems with the black economy (e.g., Adnan et al. 2012 ; Jones et al. 2006 ; Lohne et al. 2015 ). Coupled with the significance of the industry in shaping the structure, health and safety of the urban environment, the economy of households, and the ecological footprint of societies, improving the understanding of CSR integration in this context is crucial for the advancement of societal improvements through the contributions of for-profit companies.

Empirical Data

We investigated the strategic CSR integration process in SmartCo using documents, interviews, and observations (Table 2 ). Our document database consists of internal documents on the planning and execution of the new strategy within the executive group. We also examined internal communications such as PowerPoint presentations, leaflets, and guidelines for internal processes, as well as public documents such as annual reports, public presentations, and research reports. We accessed the materials through our contact person in the company, who is also the third author of this paper. In total, our document database consists of 203 documents, ranging from a few pages or slides to research reports exceeding 100 pages. We complemented this database with an examination of press releases available through the company website, which describes key events in SmartCo’s history since 2012. The documents enabled us to explore the evolution of formal representations of CSR and ethical values as part of the business strategy and to trace the development of these representations over the study period.

We interviewed people in different roles and positions in the organization to gain a detailed understanding of the CSR integration process, the associated tensions, and ways of balancing and reconciling these tensions. We conducted two rounds of interviews (see Appendix for more details). In 2015, we began with 17 interviews with top- and mid-level managers representing the company’s business units (construction business, pipe renovations, project consultation, housing business) to gain an overall understanding of the company’s strategic change process and CSR integration. Because the company did not have a dedicated CSR person or team, we pieced together our understanding on this topic from multiple informants holding different roles within the organization, from marketing and sales to HR, strategy development, technical development, and construction project management. In the second interview round in 2017, we extended this inquiry to focus on the emergence and evolution of the ethical values as part of the company strategy. In addition to interviewing selected key informants for the second time, we added informants from the company’s digital business unit and its internal ventures introduced in 2016. An additional 15 interviews deepened the insights developed through the first interview round and generated new insights into the evolution of the strategic CSR integration process since 2015.

We selected our informants from the top management team first and used snowball sampling thereafter to identify informants relevant to our inquiry. In both interview rounds, we used a thematic, semi-structured interview guide, which we updated between the interview rounds to shift attention from the strategic change process to CSR and ethical themes. In both series of interviews, we consciously refrained from imposing our own structure on the discussion. Adopting an interactionist approach (Silverman 1993 ), we allowed each interview to unfold according to the narrative and insights of the informant to gain an in-depth understanding of the informant’s views of the company.

We also draw on two types of observations. Two of the authors observed 14 events either involving or led by SmartCo’s presentation of their business, future visions, and ethical orientation and recorded their observations in a field diary. Altogether, the field diary comprises approximately 23 pages and 7000 words of detailed notes used as the material in the analysis. By involving personnel from across the organization, these observations helped us understand the company’s commitment to CSR at a more granular level, especially by offering insights into the ways in which the management framed CSR as part of the strategy, as well as by revealing the experiences of organization members concerning these topics. Thus, the outsider observations helped us understand the persistence of CSR tensions in the organization, and to gauge the success of the adopted managerial means to rein in these tensions.

We also used participant observation; the third author worked as a consultant for strategy development at SmartCo from 2012 to 2014 and was a member of the executive group between 2014 and 2018. In the latter role, the third author participated in strategy development and HR management. The third author offered first-person experiences and insights from the top level of the organization, which we discussed with the research team on numerous occasions from the beginning of 2015. Four of these discussions were structured as formal interviews, recorded, and transcribed for analysis. We also had several informal discussions around the emerging findings of this paper. Notably, the first two authors were responsible for conducting data analysis; the participant observations were integrated into the analytical process primarily as a point of reflection for the emerging findings through joint discussion, complementing the primary data sources (i.e., documents, interviews, outsider observations).

Data Analysis

This rich data enabled us to examine how the process of strategic CSR integration unfolded in SmartCo. We began the analysis by developing a general understanding of the strategic change process at SmartCo. We used the publicly available documents as well as the first round of interviews to construct a detailed timeline of key events and changes. In addition, we wrote brief memos about the company’s business units and offerings to gain a more structured understanding of the company’s strategy.

With our detailed understanding of the case organization, we then turned our analytical focus to the process of strategic CSR integration. We used grounded theory building (e.g., Strauss and Corbin 1998 ) to construct an inductive, data-driven understanding of the emergence and management of CSR tensions at SmartCo. We began by analyzing the empirical material to identify the salient CSR tensions and management practices used to balance these tensions. For both elements, we followed a similar analytical process: While reading the empirical material, we coded the segments discussing either the tensions or managerial strategies using the informants’ own words or expressions. This produced a long list of “in-vivo” codes that concisely described the CSR tensions and managerial actions. As the number of in-vivo codes grew, we turned our attention from assigning to comparing the codes to condense our “raw” observations through the data aggregation process discussed by Gioia et al. ( 2013 ). Here, we distilled the number of concepts and expressions into a more manageable set of first-order codes, which retained a close connection to the empirical material while capturing parsimoniously the distinct aspects of CSR tensions and managerial efforts. With CSR tensions, we used two criteria to organize and prune the initial in-vivo codes (Smith 2014 ): that the issue described was salient in SmartCo and that it involved a tension between business and CSR agendas. Here, we also fused overlapping in-vivo codes. For example, the code “CSR behaviors lag spoken values” fused the in-vivo codes of “slow progress with strategy enactment” and “building external hype without internal reality.” With managerial actions, we similarly combined overlapping observations and reflected the emerging first-order codes against the identified CSR tensions to judge their relevance. For example, we omitted codes linked to the facilitation of organizational growth. As a result, we arrived at a total of 24 first-order codes.

Overlapping with the previous phase, we started to compare the emerging first-order codes through axial coding (Strauss and Corbin 1998 ) to identify the properties and dimensions of the emerging CSR tensions and management practices that were relevant to the CSR integration process. We, therefore, moved from a descriptive to a theoretical mode of analysis (Gioia et al. 2013 ), iterating between empirical data, first-order codes, and the emerging second-order themes to explain the unfolding of the strategic CSR integration process. When there were disagreements over interpretations of the empirical material between the two authors responsible for the analysis, the emerging codes along with underlying quotes were examined and discussed until arriving at a mutually satisfactory interpretation. While basing the emerging categories on data-driven observations, in the final stages of the axial coding procedure, we also compared our emerging groups of tensions and management practices with the literature to clarify their conceptual boundaries and underlying mechanisms. Thus, we brought an abductive element to the analysis (e.g., Denis et al. 2001 ), which anchored our analysis more firmly in the literature. This process resulted in three aggregate types of CSR tensions, and four types of management practices through which the tensions were balanced. This process of data aggregation is summarized in the data structure in Fig.  1 , with empirical support for the categorization presented in Tables 3 , 4 , and 5 .

Data structure for CSR tensions and management practices

Timeline of the case—the emergence of CSR tensions and management practices

In the last phase of the analysis, we zeroed in on these aggregate themes to understand how the identified management practices contributed to the reconciliation of these tensions and, thus, to the strategic integration of CSR. Here, we started by examining the excerpts of empirical material associated with the CSR tensions and management practices and linked the two on the timeline of the case (see Fig.  2 ). After that, we examined the empirical material to identify examples and passages that offered insights into the ways in which the organization members engaged with the three CSR tensions in specific situations. Using our memos, field notes and participant observations as further guidance, we described how the four management practices had supported individuals and groups to navigate the CSR tensions in specific ways, and how this contributed to strategic CSR integration. In this last step, we compared our emerging observations with recent studies on tension management (e.g., Jarzabkowski et al. 2013 ; Jarzabkowski and Lê 2016 ), and used their distinction between active and defensive responses to tensions as basis for discerning and characterizing five approaches to navigating the CSR tensions. Below, we explain how these approaches to navigating CSR tensions shaped the strategic CSR integration process.

Findings: The Emergence and Management of CSR Tensions

Through data analysis, we identified three types of CSR tensions that challenged the strategic CSR integration process and four sets of management practices that balanced these tensions and supported the embedding of CSR into SmartCo’s strategy. Figure  1 , along with Tables 3 , 4 , and 5 , illustrate their empirical grounding.

Our analysis, organized according to the three CSR tensions, explicates how the identified management practices addressed the CSR tensions and supported the integration of CSR into SmartCo’s strategy. These tensions, along with the associated management practices and main organizational events, are visualized on the timeline in Fig.  2 .

The Tension Between Past Understandings and Future Visions

Nature of tension.

The service-focused strategy introduced in 2009 distinguished SmartCo from the traditional approach to construction. The new strategy contrasted several prevailing assumptions about the construction business as a technical engineering operation, which created confusion among organization members over the meaning of “service,” and later, over the nature of the company’s commitment to ethical values. Referring to the data structure (Fig.  1 ) and Table 3 , the common denominator for these tensions was the incompatibility between past understandings and future visions . Here, the CSR tension stemmed from the cognitive distance between the institutionalized understanding of construction business, on the one hand, and the espoused strategic vision of construction as a responsible service business, on the other. Involving long-standing professional identities, this resembles what Smith et al. ( 2013 ) describe as tensions of belonging (see also Smith and Lewis 2011 ); the tension between past understandings and future visions made it difficult for organization members to comprehend, endorse and enact the strategic visions that sought to redefine the basis of the company’s business.

Management’s Response to CSR Tension

Two management practices were central to balancing the tensions between past understandings and future visions (see Table 3 ). As the initiator of the strategic change process, the CEO played a pivotal role in directing CSR behavior by promoting the initially customer-oriented and later explicitly ethical business direction by personal example, and clarifying it through communication. Especially in the earlier stages, the CEO’s personal impact on the small organization was significant in instilling an open-minded and development-oriented culture in the company. As one informant recollected,

It starts with [the CEO]. […] He is visible, talks a lot with people, it is infectious. He is a good storyteller, very skilled at it. (CCO, March 11, 2015)

The CEO also set a personal example of transparency and commitment to ethical principles from early on. For instance, in 2012, the CEO learned of bribery in one of the company’s projects. This case, which the CEO reported to the police, threatened the company’s survival and cast a shadow over the legitimacy of the company’s strategic direction. The CEO’s transparent handling of the bribery case, both internally and in public, helped to take action against unethical practices. It was, therefore, instrumental in accentuating the ethical dimension of SmartCo’s strategy, and in setting a clear example within the company for ethical integrity and behavior.

Also, the CEO and top management engaged many members of the organization in strategic sensemaking . As an essential part of this management practice, SmartCo cultivated open dialogue and critical debate on strategy, which helped the management to bridge the gap between understandings inherited from the construction industry and the company’s distinctive and continually evolving strategic vision. The open dialogue, coupled with the ambiguity of the core strategy attributes, such as “service construction” and the core values of “trust, transparency, and responsibility,” maintained the strategic visions and statements in an ever-provisional state that invited organization members to interpret them in their own contexts. This, for example, allowed the construction project personnel to make sense of customer centricity and ethical values through the new collaborative practices introduced to the projects.

Among top management, this cultivated reflexivity and paradoxical thinking (see Hahn et al. 2014 , 2016 ) by giving attention to the complex issues and targets in discussions without imposing a single uniform “truth” that could have easily suppressed the diversity of relevant viewpoints. This was evident in the heated debates among top management over, for example, the balance between the society-improving visions and demands of current construction operations, and between continuing growth and the need for stability and clarity. Rather than stifling this debate, the CEO purposively maintained a dialogue despite the conflict to move forward with the strategy:

I was in the executive group yesterday, and I said that this means you don’t have to like me; you can disagree, but we have to find an agreement together. If we let go of the diversity, if we would agree, it would be easy […], but we need it to disagree and then to find agreement. (CEO, April 24, 2015)

CSR Integration Through Organization-Wide Recognition of Tensions

Strategic sensemaking and directing CSR behavior supported organization members in linking their past understandings about construction with the future visions of the company in two ways. First, these management practices increased the legitimacy and salience of ethical values as an integral part of business strategy by integrating the ethical values and society-improving visions into the formal business strategy and mission. For example, the annual reports show how the narrative of the business strategy shifted from “service model” and “customer orientation” (AnnRep 2011) to highlight the values of trust, transparency, reliability, and responsibility (AnnRep 2013) as crucial concepts in explaining the nature and content of the business strategy. Instead of strictly separating CSR from business strategy, both the formal strategy statements and internal materials framed the ethical values as crucial elements in the successful implementation and growth of the service-focused construction business (Summary of internal workshops, September 15, 2017).

Second, the management practices cultivated recognition of the tension itself as a more permanent part of the company. Here, we use recognition to refer to the actors’ acknowledgment of the competing goals and their willingness to live with the ensuing tensions while giving both business and ethical sides of the matter an appropriate consideration. This constitutes an active response to the CSR tension; it afforded a longer-term resolution by accepting the tension as a reasonable condition of organizational life (Jarzabkowski et al. 2013 ; Lewis 2000 ). Communicated by top management and enacted through their decisions, recognition took place at the organizational level in legitimizing the ethical values and incorporating ethical elements into strategic decisions. As top and middle managers were aware and tolerant of the tensions between past understandings and future visions, they saw the navigation of such tensions as part and parcel of realizing the company’s ambitious visions. Recruitment, for example, entailed a balancing act between deep technical and business expertise (‘past’) and capability for innovative and ethical practices (‘future’):

We need experienced individuals […] to undertake larger projects; we need their expertise and experience. But we have also hired lots of younger people because they are capable of learning. […] The problem is how to give these young people opportunities for growth while avoiding the [transfer of] bad habits. (COO, March 11, 2015)

The acceptance of ethical values as a legitimate basis of business strategy also translated into concrete strategic actions, such as investments into the pipe renovation (2011) and housing business (2014) subsidiaries. These units adopted the ethical values and society-improving mission as guiding principles in the development of new solutions to customers. Also, increasing attention was devoted to new contract types and collaborative practices in construction projects as manifestations of this strategy, allowing operative-level employees to make sense of the strategy in the context of their work.

The Tension of Inconsistent Behaviors

As the new strategy, based on ethical values, gradually gained acceptance, the second set of CSR tensions emerged around the implementation of the ethical values in day-to-day activities. These tensions of inconsistent behaviors derived from an internal variance in adherence to, and enactment of, the ethical values. Especially in construction projects, the reliance on competent project managers meant that not all project teams adhered equally to the ethical values but instead perpetuated the industry’s business-focused practices (for empirical grounding, see Table 4 ). As such, the inconsistent behaviors resemble the tensions of level discussed by Hahn et al. ( 2015 ) as different levels and parts of the organization disagreed on ethical values and enacted them differently, without collective synchronicity in working toward a shared goal.

Inconsistent behaviors were addressed through various means of formalizing CSR to establish a common baseline for ethical conduct (see Table 4 ). A formal code of ethics was introduced in the wake of the bribery case in 2012 to prevent future wrongdoing in construction projects, and to provide a clear set of standard rules for ethical behavior. As an example, SmartCo gave a deck of ethics cards to every employee, explaining the company’s ethical principles and discussing specific cases, such as perquisite positions, business gifts, and equality. The company’s ethical principles were written into each labor contract, and each new employee had to agree to them before signing the contract. Each employee was also required to complete regular ethical training on topics such as organized crime in construction, transparency in operations, and gender equality.

In business operations, SmartCo formalized CSR by introducing non-financial performance indicators to reward personnel for their efforts to induce greater collaboration and transparency among project stakeholders. For example, in a renovation project, the fees were tied to the customer experience of the project. The top management also set an example in resolving conflicts in construction projects with priority to non-financial goals, which accentuated the importance of the ethical basis of business and set a benchmark for employees to make similar choices. Finally, the top management increased systematic supervision of construction projects to gain better control over both the business and ethical aspects of project performance. The following statement discusses how regular meetings and standard reporting, as an example, guided project managers to follow the company’s principles:

We, too, have a lot of that mindset where [project managers] don’t want to disclose all of the details […] it is difficult to change people in that sense. But you can build your operations and systems in such a way as to force everyone to disclose everything as openly as possible. (COO, March 11, 2015)

CSR Integration Through Formal Policy and Evasion of CSR Tensions

The formalization of CSR created an organization-wide policy, which clarified the expected ethical standards to the personnel. Thus, it reined in the most blatant forms of ethical misconduct by specifying clear rules on acceptable and forbidden behaviors. Also, it established proper channels for reporting observed issues. The ethical code concretized the meaning of ethical conduct for individuals and placed it explicitly on the organization-level agenda in two ways: First, it delineated a manageable set of ethical issues for the personnel to target. Second, it stipulated the “minimum standard” for ethical behavior in these issues, thus weeding out the most egregious violations of the company’s values. Hence, it became an instruction manual of sorts, as explained by an informant:

We have given the ethical deck of cards to everyone, done the training, and signed job contracts. People understand our values and that there are no exceptions. […] it shouldn’t be a surprise that something is forbidden. Even if it was legal. (Development manager, April 24, 2015)

Such formalization, however, steered toward the organizational-level evasion of the tension of inconsistent behaviors. As the ethical code rendered ethical behavior a relevant concern only in a small number of issues domains, it allowed members to continue to prioritize technical and financial aspects of the operations without having to confront the CSR tension in many areas of their work. In particular, the issues of the black economy were foregrounded at SmartCo, with clear rules on acceptable and prohibited behavior. At the same time, decisions related to project scheduling, resourcing, or stakeholder interaction, for instance, received much less systematic ethical consideration (participant observation, September 2017). As one project manager commented,

the values and ethical principles direct our actions, but it is a positive thing that each [project manager] can make a construction site their own, so long as the common principles are OK. (Field notes, internal workshop, August 31, 2017)

As the quote implies, prioritizing ethical values on issues falling outside the scope of the ethical code was left largely to each individual’s discretion. Evasion thus constitutes a defensive response; it provided a partial relief on organization members in dealing with complex pressures, but did so by suppressing the ethical side rather than embracing it as a critical element in day-to-day decisions (Jarzabkowski et al. 2013 ). This defensive response allowed SmartCo to work around the CSR tension by maintaining the salience of ethical themes, on specific issues, while continuing to prioritize business targets on others.

The Tension Between Competing Decision-Making Rationales

In parallel to the two CSR tensions mentioned above, the rapid growth and internal structuring of SmartCo triggered the third set of tensions, which we characterize as tensions of competing decision-making rationales (see Table 5 for empirical grounding) . This type of tension foregrounds the differences between the technical and financial criteria for managing construction projects, on the one hand, and the customer-centric and ethically responsible view of the business advocated mainly by the top management and select business units, on the other. Although the tensions among competing decision-making rationales was present throughout the study period, given the spatial (and cognitive) distance between the construction sites and the headquarters, it became increasingly salient in the last three to four years when the company’s personnel grew well into the triple digits. While in earlier stages the proximity of the CEO and other executives helped navigate the ensuing tensions in the CSR integration process (see above, also Weaver et al. 1999b ), the growing middle management, increasing reliance on formal control systems, and the widening gulf between the business units undermined collective commitment to common values and targets.

As such, the tensions among competing decision-making rationales resemble what Smith and Lewis ( 2011 ) describe as the tensions of performing (see also Ozanne et al. 2016 ; Smith et al. 2013 ): the organizational sub-units began to interpret and prioritize the ethical values differently in their hierarchy of goals and strategies. Also, the revised business strategy, introduced in 2017, separated the company-level development targets, incorporating the ethical values and society-changing mission, from the efficiency-focused goals of the construction business unit. This discrepancy increasingly undermined SmartCo’s strategic commitment to CSR.

In response to the tensions associated with competing decision-making rationales, the management intensified the use of ethical values and society-improving mission as a central part of strategic sensemaking , helping different business units to link their efforts with the same unifying purpose (for empirical support, see Table 3 ). Furthermore, from 2014, the management started to organize company-wide events once or twice a year to communicate the strategy more systematically. One of these events focused on organizational culture to reinforce the ethical basis and collective direction for the rapidly growing company. For example, the top management organized a company-wide series of strategy workshops in 2017 to clarify the role of each business unit in the bigger picture.

In parallel to the internal sensemaking, the ethical values and mission became more central to external communications, with the CEO making high-profile appearances in the mainstream media calling for more socially responsible practices in the construction industry. These internal and external events with converging storylines strengthened the credibility of the ethical business strategy. They provided a personally meaningful basis for members to commit to the strategic visions that emphasize ethical values and responsible practices as a means to achieve societal change. Echoing the sentiments of many employees, a project manager explained how

the values speak to us on a personal level, and we live by them. […] Our culture is good for us as people; it is engaging, offers opportunities for personal development. (Field notes, internal workshop, August 31, 2017)

Furthermore, commitment to the ethical strategy was reinforced through concerted efforts to develop the workforce (see Table 5 ). First, it involved an increasingly selective recruitment of new employees, emphasizing the compatibility of their personal values with those of the company. Although exceptions were made in the construction business due to its rapid growth and high demand for technical expertise (furthering all three types of CSR tensions), the positive external image of the company enabled SmartCo to cherry-pick employees that were interested in society-improving innovation. Furthermore, workforce development involved ethical training to deepen the awareness of ethical questions within the organization.

CSR Integration Through Situated Adjustment Based on Organizational Identity

These management practices reinforced members’ awareness of, and commitment to, ethical values. Besides strengthening the grounding of formal strategy in ethical values, the management practices deepened the way in which the members of the organization conceived of themselves as an organization—that is, their organizational identity (Albert and Whetten 1985 ). Indeed, the ethical values and society-improving mission were frequently mentioned as the central and distinctive features of SmartCo, which for many, offered a personally meaningful basis for withstanding the tensions and working toward the company’s visions.

I think the values we have, what [the CEO] talks about, trust and these things are essential, and that we start with the customer’s needs and goals and strive to find the future users the kind of buildings they need. […] Our way of thinking is respectable. It supports what I want as a person, what kind of values I have. (Foreman, April 28, 2015)

This statement reflects how the organizational identity, based on ethical values, transcended business unit boundaries and allowed organization members to see themselves as part of the organization’s mission despite the somewhat diverging targets and decision-making rationales. Concerning the tension between competing decision-making rationales, the organizational identity supported individuals in making situated adjustments to accommodate, at the action level, both the ethical and business aspects when dealing with the complex targets imposed on their work. Hence, it was an active response based on the acceptance of both the financial and ethical aspects as essential for the company’s long-term success (Jarzabkowski et al. 2013 ). For example, the identity-defining values offered individuals critical concepts with which to put the day-to-day challenges into perspective and to orient their efforts toward larger goals, as indicated in the following interview segment:

I understand [our vision] to mean that we are building a smarter society, in very concrete terms. […] we are breaking the existing myths and practices in the construction industry. I believe that SmartCo is a construction company for the people, and with my effort, I too try to get us past the egoistic culture, to change things through collaboration, even with our competitors. (IT development manager, January 27, 2017)

Navigating Inconsistent Support Through Confrontation and Regression

At the same time, the ongoing separation of business units and their strategic objectives undermined individuals’ ability to reconcile ethical with business goals in their work. As discussed in the context of inconsistent behaviors, the management offered little support for individuals in navigating the multiple decision-making rationales outside the scope of the ethical code. In some cases, it even set a contrarian example by tolerating unethical behaviors to secure profits in construction projects despite advocating ethical values in organizational-level strategic sensemaking.

This placed significant pressure on individuals to advocate ethical values at the action level while pursuing their business goals. Although the organizational identity provided a backbone for ethical deliberation and adjustment between the dual targets, many employees experienced dissonance between espoused values and actual priorities, and felt powerless to advocate the ethical values under the financial pressures and busy schedules of their daily work:

Participants’ sentiment: In principle, we are encouraged to be self-directive, supported to develop ourselves, but often the frame [of day-to-day targets] is so tight that we end up into a forced compromise where only the frame matters. (Summary of internal workshops, September 15, 2017)

This animation of the CSR tension was evident, for example, in informal discussions voicing complaints about situations in which the efforts to advocate the values were diluted or downright blocked by the management. This internal contradiction forced individuals to respond to CSR tensions in one of two ways in their day-to-day actions. First, some individuals were more centrally positioned and adept at advocating the ethical values by directly confronting the tension by bringing it under explicit discussion, even when it heated up the situation (Lewis 2000 ). In one instance, the HR team implemented measures to support employee wellbeing, including a system for worktime monitoring, which clashed with the prevalent exploitation of unpaid overtime. While some project managers accepted the new HR policy for tracking work time, seeing it as compatible with the company’s values and beneficial over the longer term, the policy also induced clashes with project managers and business unit management over the detrimental impact of the policy on profits (participant observation, December 2017).

In contrast, many individuals, especially in operative positions, were forced to ignore the ethical values and regress (Lewis 2000 ) to focus on financial targets alone to survive their heavy workload (field notes, informal discussion, September 1, 2017). Indeed, the disconnect between espoused support for self-directive work as per the company’s values, and the reality of strict day-to-day targets, forced compromises on everything but the short-term business targets, giving employees little option to promote ethical values, especially as the management did not give a clear signal that the ethical aspirations mattered beyond the scope of the ethical code. For example, a new foreman, who had accepted the company’s values wholeheartedly, identified an ethical issue in his current project and brought his concern to the project manager in an attempt to rectify it. When the project manager rejected this effort, citing the functioning and profitability of the construction site, the foreman took the issue to the business unit management. However, the management then disciplined the foreman for escalating the matter, although later, a top manager involved in the case admitted that the foreman had been correct to demand more ethical behavior (Field notes, informal discussion, October 5, 2018).

Strategic CSR Integration Through Navigating CSR Tensions

In summary, the management practices adopted in response to the three types of CSR tensions allowed SmartCo to navigate the CSR tensions and thus contributed to strategic CSR integration. We use the term navigation to highlight the need for ongoing effort in apprehending and addressing the CSR tensions that arise during the strategic CSR integration process and elude permanent resolution (Jay 2013 ). As we summarize in Table 6 and discuss below, SmartCo’s approach to navigating CSR tensions (bolded) extended, but also to some extent undermined, organization-wide commitment to CSR.

Our findings highlight the importance of navigating CSR tensions simultaneously at the organizational and action levels (see also Hengst et al. 2020 ). Organizational-level responses relate to the organization’s strategic commitment to CSR and its organization-wide efforts, including formal policies and governance, which set the tone for apprehending and addressing the CSR tensions. Action-level responses , in turn, pertain to the individuals’ and teams’ situated reactions to the CSR tensions that confront them in their daily work and influence the degree to which CSR is enacted in the day-to-day actions. The findings reveal how SmartCo succeeded in cultivating organizational-level recognition of the CSR tensions, which introduced and sustained CSR as an integral part of business strategy. It also created an organization-wide policy for ethical behavior. However, inadequate support for navigating tensions at the action level, especially in construction projects, contributed to perpetuating CSR tensions, prioritizing business over ethical targets, and thus inhibiting the integration of CSR into day-to-day actions across the organization.

The findings also distinguish between active and defensive responses to tensions (Lewis 2000 ; Jarzabkowski et al. 2013 ), proposing the active response to be necessary for advancing strategic CSR integration as they allow organizations to deal constructively with the CSR tensions with an eye on maintaining a long-term balance. For example, top management’s strategic sensemaking and personal direction-setting allowed SmartCo to cultivate organization-wide acceptance of the ethical business strategy by recognizing the tensions between past understandings and future visions. Similarly, strategic sensemaking and workforce development shaped organizational identity around ethical values, supporting individuals to adjust their behaviors between competing decision-making rationales. Conversely, defensive responses to CSR tensions provided only short-term relief from the tensions by compromising on some of the CSR aspects in the business practice. For example, the formalization of CSR through an organization-wide ethical code rendered CSR a legitimate concern only in a few issue domains. Although this simplified the content of CSR for organization members, it also supported the defensive evasion of CSR tensions, which left the members of the organization to their own devices in dealing with many of the CSR tensions they experienced at the action level.

As a result, the ethical values that were salient in communications regarding business strategy and future visions became increasingly divorced from members’ day-to-day experiences (Summary of internal workshops, September 15, 2017). As elaborated in the following quote, this amplified CSR tensions and eroded the members’ commitment to the ethical business strategy:

We talk about [the values] more than others, but you also hear more about there being a significant bulls**t gap. [A colleague] brought up this a few weeks ago, that we get a lot of feedback that the management does not act in accordance with the values. […] And this is not an issue of the management not believing in our values, but the speed is so high at the moment that it forces [us] to take shortcuts, which makes the values invisible [in our work]. (HR director, November 6, 2017)

That is, misalignment in navigating CSR tensions, both between organizational and action levels and between business units, stalled and threatened to reverse strategic CSR integration at SmartCo. Thus, our findings suggest that alignment in navigating CSR tensions across the organization is crucial for maintaining CSR on the strategic agenda over time.

Discussion and Contributions

Integrating CSR into the strategy and core business activities of a for-profit company is laden with tensions stemming from the contradictions between business and CSR. Our findings from a construction company revealed several management practices that allowed the company to cope with CSR tensions. The findings emphasize the essential role of active navigation of CSR tensions, and alignment in navigating the tensions between organizational and action levels.

Implications for Research

Our findings make three main contributions to the CSR literature. First, we contribute to the CSR development literature by foregrounding the CSR tensions and the means to navigate them as a central yet previously overlooked element in the strategic CSR integration process. Prior research on CSR development has focused on describing the stages of CSR integration (e.g., Maon et al. 2010 ; Mirvis and Googins 2006 ; Reidenbach and Robin 1991 ), the associated management challenges (Rossouw and van Vuuren 2003 ), and the systematic design and implementation of CSR programs for organizations (e.g., Ingham and Havard 2017 ; Maon et al. 2009 ). Extending this work, we shed new light on how management can improve the ability of the organization to navigate the CSR tensions that inevitably arise when making the transition from a dismissive or peripheral to an integrated CSR approach (Aguinis and Glavas 2013; Weaver et al. 1999b ). Our findings portray strategic CSR integration as an ongoing process of navigating CSR tensions that remains, to varying forms and degrees, part of the life of the organization. Correspondingly, the advanced stages of CSR integration are characterized less by “the seamless integration of ethics in corporate purpose, strategy and operations” (Rossouw and van Vuuren 2003 ), and more by persistent internal tensions and growing efforts to rein them in without losing sight of either the business or CSR targets.

Second, our findings contribute to the CSR development literature by improving the current understanding of the precise ways in which navigating CSR tensions influences the process of strategic CSR integration. Here, we draw on two distinctions—between the organizational and action levels as the locus of navigating tensions (Hengst et al. 2020 ), and between active and defensive responses to tensions (Jarzabkowski et al. 2013 ). Our findings show how CSR development depends on the navigation of CSR tensions at both the organizational and action levels; building acceptance of a responsible business strategy at the organizational-level supports, but must also couple with, the navigation of CSR tensions at the action level. Furthermore, alignment between the levels in navigating tensions is essential for CSR integration, with emphasis on active responses. Whereas defensive responses can stall the CSR integration process, for example, by prioritizing business targets over CSR, the active navigation of CSR tensions builds a longer-term balance between business and CSR by accepting and working through the tension. Alignment refers here to the compatibility and complementarity of responses across organizational levels, but not to complete uniformity in responses to tensions across the organization. In the context of CSR tensions, it is necessary to tolerate discrepancies between formal and informal responses (Crilly et al. 2012 ) and leverage conflicting management practices (Scherer et al. 2013 ) to navigate situational contingencies constructively (Jarzabkowski et al. 2013 ). In this spirit, our findings add a new layer to studies that call for internal consistency between business and CSR within the organization (e.g., Basu and Palazzo 2008 ; Yuan et al. 2011 ).

Third, our findings shed new light on the integrative view of CSR, and especially the insights it brings to the management of CSR tensions as an unavoidable and inherent part of strategic CSR integration (e.g., Gao and Bansal 2013 ; Hahn et al. 2015 ). Whereas this literature has remained largely conceptual (Van der Byl and Slawinski 2015 ), drawing on the ideal type tensions and solution mechanisms rooted in the paradox literature (e.g., Hahn et al. 2018 ; Smith and Lewis 2011 ), our study offers new, empirically grounded insights into the management of tensions in the strategic CSR integration process. Specifically, we shed new light on how organizations navigate CSR tensions, and explicate the role of management’s interventions in supporting and obstructing the active navigation of CSR tensions. Thus, our findings open doors to more nuanced and multifaceted accounts of managing CSR tensions. For example, we expand the studies of the individual- and organizational-level capabilities for balancing tensions (e.g., Hahn et al. 2016 ; Ivory and Brooks 2018 ; Vallaster et al. 2019 ) by illustrating how such capabilities (e.g., strategic sensitivity, collective commitment, the climate of reflexivity)—viewed here through the lens of management practices—reinforce the ability of the organization to sustain its focus on both CSR and business targets.

In addition, this paper engages with studies that adopt a practice perspective to adopt a practice perspective to the management of paradoxical tensions. As some of the CSR tensions observed in our study had paradoxical elements (e.g., Lewis 2000 ), our analysis complements the practice-focused line of work by exploring how an organization can navigate paradoxical tensions at the organizational and action levels (e.g., Lüscher and Lewis 2008 ; Smith and Lewis 2011 ). Jarzabkowski et al. ( 2013 ) have shown that responding to a paradox is a dynamic and ongoing process involving different types of responses evoked by organization members as part of their work. Through elements such as humor (Jarzabkowski and Lê 2016 ) or “both/and” thinking (Lüscher and Lewis 2008 ), individuals can work constructively with the paradoxes and transform them to support innovative solutions (Beech et al. 2004 ; Jay 2013 )—including those that integrate business and sustainability targets (Hengst et al. 2020 ). Our findings advance this research by translating its insights to the CSR context and making them applicable to questions about CSR integration. Also, our study highlights the impact of management interventions and organization structure on the navigation of CSR tensions at different organizational levels.

Managerial Implications

From a managerial standpoint, we follow Porter and Kramer ( 2006 , 2011 ) in advocating strategic CSR integration as the pathway through which companies can credibly respond to the growing criticism of their lack of social and environmental responsibility. However, this is not a straightforward task, given the persistence of CSR tensions. Our findings offer guidance for managing strategic CSR integration in relation to two managerial challenges. The first challenge is to cultivate the acceptance of CSR as an integral part of business strategy. We show how this acceptance depends on strategic sensemaking that integrates CSR into the company’s long-term visions and definition of competitive advantage. In addition to top management communication, the sensemaking process should enlist organization members in debating the company’s direction and couple with the personal example of top management in prioritizing non-financial goals. Selective recruitment and systematic training in alignment with the company’s values provide suitable means for managing tensions in this regard.

The second challenge is the avoidance of mission drift in the face of recurring business challenges and persistent CSR tensions. This requires management to support employees in advocating CSR agendas at the operative level. While shared policies help clarify the enactment of CSR, support is needed for employees to make choices that prioritize CSR, with emphasis on removing obstacles such as contradicting reward systems. Management must also take care to balance the demands placed on employees concerning operational and developmental targets because fatigue and constant pressure limit employees’ ability to remain attentive and reflexive toward business and CSR goals simultaneously. Finally, the management should regularly reinvigorate the company’s commitment to CSR, for example, through ethical training and the inclusion of CSR as a topic in company-wide events. This keeps CSR at the forefront of employees’ attention and signals that the management cares, especially when management decisions are consistent with the policies that it espouses.

Limitations and Future Research

Certain characteristics of our case bring a distinctive flavor to our study and influence the generalizability of our findings. In the small but rapidly growing company, the CEO wielded significant influence over the organization’s CSR orientation and identity reformation, especially early on in the CSR integration process. Although we believe that the same management practices and underlying approaches to navigating CSR tensions are relevant to larger organizations pursuing strategic CSR integration, future research is needed to explore the navigation of CSR tensions in established organizations that are likely to take a more systematic approach to initiating the “cultural” change that grounds strategic CSR integration (e.g., Ingham and Havard 2017 ).

Also, the construction industry is characteristically local and capital-intensive, and CSR has not played an essential role in its reputation. This context made it easy for SmartCo to differentiate its strategic advantage and organizational identity by underscoring ethical values, something which may not be as easy for companies in industries with higher ethical standards and requirements for CSR. Thus, industries that are more sensitive to CSR issues may exhibit different types of CSR tensions and call for companies to respond to stakeholder demands differently from our case context. In addition, the spatially dispersed organization of construction companies poses unique challenges for implementing CSR at the operative level. More research is needed to understand the distinct demands and implementation pathways of CSR across industries.

Methodology-wise, our findings are limited by our largely retrospective analysis of the navigation of CSR tensions. While the documents and retrospective interviews enabled us to develop a coherent understanding of CSR tensions and CSR integration outcomes over a nine-year period, we encourage future research to adopt an ethnographic approach to investigate more deeply how individuals and groups navigate CSR tensions in real-time. Furthermore, such a research approach enables a closer analysis of how the different tactics to navigate tensions intersect over organizational change processes, and co-evolve with the CSR tensions. An ethnographic approach would also enable future work to focus on the transitions between CSR development stages (Maon et al. 2010 ), and investigate the factors that either maintain or resolve internal discrepancies among different parts of the organization in integrating CSR into business practices (Mirvis and Googins 2006 ).

Finally, our work encourages future research to bring the notions of strategy and CSR under closer scrutiny (see also Brooks 2005 ). Following the practice perspective adopted in the study of paradoxical tensions (e.g., Jarzabkowski et al. 2013 ), we view strategy and CSR not as something an organization has, but as something it does through its activities in the formulation and implementation of its strategy (Vaara and Whittington 2012 ). This perspective draws attention to the discursive and material practices through which individuals and groups construct specific notions of CSR and strategy (e.g., Gond et al. 2018 ). Hence future research is needed to inform us about the ways in which organizational decision-makers relate business and CSR, both discursively and practically, as well as how this influences—and is influenced by—the navigation of CSR tensions within the organization.

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Siltaloppi, J., Rajala, R. & Hietala, H. Integrating CSR with Business Strategy: A Tension Management Perspective. J Bus Ethics 174 , 507–527 (2021). https://doi.org/10.1007/s10551-020-04569-3

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Strategic CSR for companies of all sizes

by APLANET , APLANET

Apr 04, 2023

Is strategic CSR just a possibility for big companies with big budgets? 

In the past, corporate social responsibility (CSR) was thought to only be within reach of large companies, but more and more studies are researching the social responsibility stance taken on by other types of companies, such as small and medium-sized enterprises (SMEs), public institutions and not-for-profit organisations.

Despite the belief that CSR is only effective for big companies with big budgets, the reality is that a well-defined CSR strategy can be incredibly effective even for small and medium-sized companies in helping them achieve specific business goals, and also for society as a whole, as revealed by this analysis . 

Read on to find out how to apply strategic CSR to your organisation, regardless of its size. 

Strategic CSR: Aligning CSR with business strategy

A CSR strategy involves taking a holistic approach to CSR in a company’s strategic planning and central operations in order for it to tend to the needs of a wide range of stakeholders and achieve maximum economic and social value over the medium and long term.

Strategic CSR does not mean corporate philanthropy. Instead, it is a series of initiatives and actions that helps provide organisations with bountiful opportunities to learn from the projects in which they are investing and then use this new-found knowledge to build up the company’s basic competencies, while also improving social and environmental conditions. 

This allows CSR activities to create a pathway for learning and innovation within organisations , in addition to offering benefits for society and the environment. 

Strategic CSR activities create value for stakeholders and bolster the company’s business and social performance, which contributes to creating a sustainable society in the long run.

What is CSR in strategic management?

Integrating CSR into strategic management involves considering the social and environmental implications of the company’s strategic decisions, in addition to its contribution to social and environmental wellness. This isn’t just important for improving the company’s image and reputation, but it also ensures its long-term sustainability .

One way of integrating CSR into strategic management is through adopting the social management philosophy . This entails viewing CSR as not just an ethical issue, but also as an opportunity to create value for the company and for society. 

Social management is based on the idea that a company can maximise its long-term economic value at the same time as it improves social and environmental well-being. It also requires identifying and managing the company’s social and environmental impacts all along the value chain , from buying raw materials to waste disposal.

In order to incorporate CSR in strategic management, identifying the company’s key processes and ascertaining how CSR can improve these processes is vital. 

For example, integrating CSR into the supply chain can enhance product quality and reduce costs while also reducing its environmental impact. Similarly, integrating CSR into human resource management can improve employee retention and motivation, which in turn boosts productivity and profitability.

Another way of adding CSR to strategic management is through stakeholder theory . This theory states that companies not just have a responsibility towards their shareholders, but also to other stakeholders, such as their employees, clients, suppliers and society as a whole. 

Stakeholder theory calls for companies to consider the impact that their strategic decisions have on all these different stakeholders and strike a balance between their needs and expectations .

Finally, in order to incorporate CSR in your company’s strategic management, you will need to foster a business culture that values sustainability and social responsibility. This means: 

• Setting clear goals and targets. 
• Developing systems for monitoring and assessment. 
• Promoting collaboration and dialogue with different stakeholders.

Successfully including CSR in your company’s strategic management can help it improve its reputation, reduce risks, increase innovation and boost its long-term profitability.

Strategic CSR based on company size

The goal of CSR is to find a balance between the company’s financial success and the well-being of society and the environment. As it has continued to blossom into a common business practice, companies of all different sizes have begun to adopt a range of CSR strategies.

In particular, CSR strategies vary based on the size of the company. Below we’ll analyse specific CSR strategies for three different types of company: SMEs, large companies and corporations.

CSR in SMEs

Small and medium-sized enterprises (SMEs) are usually limited in terms of the resources they can dedicate to CSR. However, this doesn’t mean that they can’t implement effective practices. 

For SMEs, CSR needs to form part of their overall business strategy, focusing on areas in which the company can make the biggest difference .  

SMEs often opt for strategies that aim to improve the working conditions of their employees, reduce their environmental impact, launch local initiatives or reduce their carbon footprint in their immediate surroundings. 

It is imperative to remember that the strategy must be aligned with the company’s vision, mission and values.

Another thing to take into consideration when devising a CSR strategy for SMEs is employee involvement : since these types of companies are small, employees must be involved in a more direct and effective manner, which can result in greater commitment to the company’s CSR objectives.

What’s more, they can collaborate with other SMEs to maximise their impact by putting into action joint CSR practices and sharing resources and knowledge.

CSR in large companies

Large companies have a lot more resources that they can allocate to CSR, allowing them to implement broader, more sophisticated practices that involve the entire supply chain .

In addition, large companies often roll out more ambitious and wider-ranging CSR initiatives through collaborations with both non-governmental and governmental organisations . 

These types of companies also tend to publish information on their CSR practices and their achievements, which frequently takes the form of a sustainability report.

CSR in corporations

Corporations boast even more resources than large companies do and, as a result, they can carry out CSR practices that are even more ambitious and wide-ranging. 

They usually have a structured CSR strategy that covers all aspects of the business and focuses on initiatives that may have a large-scale impact .  

Furthermore, corporations habitually work with a variety of stakeholders , from non-governmental organisations to local communities and governments, in order to implement these extravagant CSR initiatives. 

They also publicly release information about their CSR initiatives and their achievements in a sustainability report, while they often have a dedicated CSR team in-house.

How to create a strategic CSR plan

For companies that are looking to survive and prosper in the long term, CSR has become a strategic must and, as a consequence, they have to prepare strategic plans in order to guarantee the effectiveness of their CSR initiatives.

Let’s take a look at the steps we need to follow when creating a strategic CSR plan:

• Evaluating the current outlook: Before setting out on creating a CSR strategic plan, we first need to review our current CSR policies, work practices, environmental impact, and relationships with suppliers and local communities, among other aspects. It’s important to remember that this evaluation needs to be honest and comprehensive to be able to identify the areas that must be improved.
• Identifying CSR goals: These goals should be specific, measurable, achievable, relevant and time-bound. Therefore, we need to set realistic objectives that we can reach in a reasonable time frame.
• Identifying stakeholders: Companies must identify and prioritise relevant stakeholders, such as their employees, clients, suppliers, shareholders, the local community, etc. Each group may have a distinct set of needs and, as such, we will have to handle them differently.
• Developing CSR strategies: When it comes to developing strategies to help us achieve the goals we’ve set ourselves, we can start by implementing fair working practices, reducing our environmental impact, supporting local communities and promoting diversity and inclusion within the company.
• Implementing and monitoring: Once we’ve developed our CSR strategies, it is vital that we implement them and monitor their success. By establishing metrics that measure success and regularly monitoring them, we can make sure that we are on the right track.

If you need to measure your metrics in order to maximise your CSR strategy, APLANET’s software can help you. If you would like more information, click here .

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