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A conceptual framework for measuring value creating Corporate Social Responsibility

  • The increasing public awareness of business related impacts on environmental and social well-being, be it positive or negative, are nowadays key drivers of corporate success. Internal and external business environments exert pressure and force transparency as well as responsible action in terms of resolving environmental and social impacts. In line with this, Porter and Kramer regard business behaviour that addresses societal needs and challenges, as the “new way to achieve economic success”. However, whereas some companies “remain trapped in an out-dated approach to value creation” and restrict their CSR commitment to the compliance with governmental regulation, others proactively address stakeholder needs. By addressing these needs, companies can benefit from grasping the opportunity of enhanced cost efficiency and lowered risk or gaining competitive advantages through establishing unique value propositions, in a way that meets stakeholder demands. Apart from that, CSR performance can be seen as powerful tool to successfully influence stakeholder perceptions in terms of reputation, and thus an exceptional source of value creation. In addition to this, organisations can profit from win-win-win situations related to syncretic value creation by means of partnering with stakeholders. This, however, implies expanding the focus of cost- and risk-reduction towards increasing competitiveness through creating mutual benefits for environment, society and the economy alike. Although a growing number of companies have recognised the advantages coming along with Corporate Social Responsibility engagement, the accompanying efforts have not been sufficiently mature yet. Due to the fact that many organizations apply a rather narrow and out-dated approach to value creation, they fail to achieve a balance between environmental, social and economic objectives. This, in turn, implies a restriction in their ability to exploit the full value creation potential that is related to CSR engagement. But even organisations applying a broader perspective of value creation, struggle to internalise the opportunities. This is mainly due the challenge of balancing and integrating economic and non-economic criteria. At the same time, organizations are facing the challenge of getting support from senior management and staff. Thus, in order to profit from adopting a ‘broad perspective’, firms must build a deep understanding of the benefits resulting from mutual value creation. However, the main challenge remains the systematic and strategy related integration of Corporate Social Responsibility strategies into core business processes. In respect to this, organizations have to take into account that “social and environment performance are almost certainly unique to each organization”. Thus, value creation in terms of CSR has to be understood as a highly complex set of cause-an-effect relationships among mediating variables and situational contingencies, which is too specific to rely on poorly structured and generic approaches. In brief, organisations seem to struggle establishing an understanding that does not consider environmental, social and economic benefits as mutually exclusive. Notwithstanding, that such an understanding is established the complexity of factors influencing Corporate Social Responsibility impedes to balance between economic and non-economic criteria. Furthermore, organisations have difficulties to strategically integrate, manage and measure environmental and social performance drivers as well as outcome measures.

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Author:Michael Volkmann, Tobias Meurer
Series (Serial Number):Kölner Schriftenreihe International Management (1)
Editor:Michael Volkmann
Document Type:Working Paper
Date of first Publication:2020/03/11
Date of Publication (online):2020/03/24
GND-Keyword:Corporate Social Responsibility; Wertschöpfung
Tag:CSR; Measuring Corporate Social Responsibility; Value creating
Page Number:65
Institutes:Wirtschafts- und Rechtswissenschaften (F04) / Fakultät 04 / Schmalenbach Institut für Wirtschaftswissenschaften
CCS-Classification:A. General Literature
Dewey Decimal Classification:300 Sozialwissenschaften / 330 Wirtschaft
JEL-Classification:A General Economics and Teaching
Open Access:Open Access
Licence (German):License LogoEs gilt das UrhG