Corporate Social Responsibility, Strategy and Culture: Bati Anadolu Group Case

Beginning of article

1. INTRODUCTION

Corporate Social Responsibility (CSR) consists of actions that appear to further some social good beyond the interests of the firm and that which is required by law (McWilliams & Siegel, 2001). Although the concept has received growing attention from business scholars in recent years, Bowen provided the first modern definition of the concept as early as 1953, stating that businesses are responsible for their actions beyond profit and loss statements. However, at those days there were opposing ideas arguing whether organizations should be socially responsible or not. According to Friedman (1970), managers are the agents of shareholders whose major concern should be increasing shareholder value by maximizing profits. Hence, any investment to serve social interests beyond economic rules is the breach of this principle-agent relationship. In this view, managers' actions for the good of society should be at their own expense. In 1979, the term gained an ethical dimension with the definition of Carrol: "the social responsibility of business encompasses the economic, legal, ethical and discretionary expectations that society has of organizations at a given point in time." Also, it has been recognized that the stakeholders are not limited to shareholders alone. In order for a company to succeed, the impact of external and internal factors on all stakeholders should be considered (Freeman, 1984). Accordingly, Frederick et al. (1992) defined CSR as "a principle stating that corporations should be accountable for the effects of any of their actions on their community and environment." Moreover, Van Marrewijk (2003) provided further clarification by stating that "in general, corporate sustainability and CSR refer to company activities voluntary by definition--demonstrating the inclusion of social and environmental concerns in business operations and in interactions with stakeholders". Finally, the most preferred definition of CSR according to the study of Dahlsrud (2008) is made by the European Commission in 2001 as "a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis". According to Dahlsrud (2008), CSR definition encompasses five major dimensions: the environmental dimension (the natural environment), the social dimension (he relationship between business and society), the economic dimension (socio-economic or financial aspects, including describing CSR in terms of a business operation), the stakeholder dimension (stakeholders or stakeholder groups) and the voluntariness dimension (actions not prescribed by law). For the rest of the study, where the alignment of CSR with strategy and culture will be reviewed, the definition of the European Commission (2001) will be referred to as a guide since it includes all five dimensions in a clear manner.

2. CSR AND STRATEGY

Due to globalization, competition has increased all around the world. Since corporate social responsibility and competitive advantage have gained importance, the global tendency has become "being socially responsible to gain competitive advantage". Hence, companies started to consider society's advantages and benefits besides company's own advantages while forming and implementing their strategies. This has caused a relationship to occur between strategic management and CSR. In fact, CSR is potentially a "strategic matter" because it can change the frame of the organizations either partially or totally. Therefore, regardless of company motives for integrating CSR into strategy-making processes, there is a strong argument that CSR should be considered a strategically important concept for organizations (Carrol & Shabana, 2010).

Strategic management is a decision making process in a corporation which helps to determine the plans to achieve goals. The strategies would include economic and non-economic actions and contributions for both shareholders and stakeholders (Andrews, 1987). The strategic decisions of a company should include social and economic consequences for both the society and the company. Lately, strategists and managers have started to take into account societal expectations to meet the needs of society and stakeholders as well. Social responsibility is included as a main component of strategy formulation in the Harvard Business School's strategy model. All these are briefly described as four main activities of organizations that are managed by socially responsible strategies in the study of Katsoulakos & Katsoulakos (2007). Accordingly, CRS policies, strategies and performance/ risk indicators need to be developed as an …