Implementation of Michael Porter's Strategic Corporate Social Responsibility Model

By Milliman, John; Ferguson, Jeffery et al. | Journal of Global Business Issues, Spring 2008 | Go to article overview

Implementation of Michael Porter's Strategic Corporate Social Responsibility Model


Milliman, John, Ferguson, Jeffery, Sylvester, Ken, Journal of Global Business Issues


ABSTRACT

Michael Porter and Mark Kramer (2006) propose that Corporate Social Responsibility (CSR) should be linked to core business objectives that are leveraged for increased economic and social values. While the strategic CSR approach is intriguing less attention was placed on implementation. The purpose of this paper is to articulate the specific methods for implementing CSR and employs case studies to illustrate each step of the process. Our conclusion includes implications for future practice and research.

Introduction

"Debates continue to rage about whether or not firms should engage in socially responsible behavior. On the one hand, traditional economic arguments suggest that managers should make decision that maximize the wealth of their firm's equity holders....On the other hand, some business and society scholars have argued that firms have a duty to society that goes well beyond simply the wealth of equity holders....One way to resolve this conflict is to observe that at least some forms of socially responsible behavior may actually improve the present value of a firm's future cash flows..."

Alison Mackey, Tyson Mackey, & Jay Barney (Academy of Management Review, 2007; p. 817).

The authors of these statements contend that corporations undertaking corporate social responsibility (CSR) initiatives do so for rational reasons and that such programs can be used to maximize the market value of the firm. How exactly can corporations undertake CSR activities that also have a direct positive economic impact? An example will help illustrate the strategic application of CSR. Steve Bigari was the owner of ten fast food restaurants in the western U.S. Like many service sector managers, Bigari was frustrated by high turnover rates and low productivity in his front line workers. The problem remained even after he introduced a variety of pay incentives. Frustrated by the lack of success of traditional business and human resource (HR) programs, Bigari began asking deeper and more penetrating questions of his employees regarding whey they didn't come to work. This more in-depth assessment revealed that many of his low-wage workers had a number of personal life constraints (e.g. lack of transportation to work, child care, etc.) which were the key underlying sources of the turnover and that were not addressed by the traditional pay incentives and other HR practices.

Rather than give up, Bigari considered determining how he could address the underlying societal issues affecting this business problem. He set up programs with governmental and non-governmental organizations (NGOs) to provide the social services needed by his workers. This step required identification of social services organizations, assessment of which ones to work with, and development of a coordinated approach with the selected partners. This process took time, but resulted in Bigari being able to solve an important problem which couldn't be resolved by traditional business means. By addressing the underlying issues, Bigari was able to attain a much productive and reliable workforce and also create a positive impact on the personal lives of the employees (Milliman, Ferguson, & Czaplewski, 2008).

This situation provides an illustration of how CSR can be used to create mutual economic and societal benefits. Despite the increasing popularity and prominence of CSR, the well known business strategy expert, Michael Porter and his colleague Mark Kramer (2006), observed in a recent Harvard Business Review (HBR) article that while organizations have increased their emphasis on CSR, these activities are usually not connected to the organization's business strategy. The result is suboptimal economic or social impacts. Porter and Kramer contend that the reason for this is that organizations often develop CSR programs based on (a) doing something good, (b) creating programs in a reactive manner in response to external pressures from society, (c) enacting activities that are aimed solely at public relations, or (d) gaining a positive score on CSR scorecards.

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