Summary
The article by Michael E. Porter and Mark R. Kramer focuses on the connection between corporate social responsibility and society with references to achieving the possible competitive advantage. Thus, the authors analyze companies about their focus on corporate social responsibility as the mean to effectively compete within the industry. Porter and Kramer state that companies can focus on creating the shared value to contribute to the effective interdependence of companies and societies. This shared value and competitive advantage can be accentuated with references to the specific framework chosen by the company to respond to their needs about corporate social responsibility.
The authors pay attention to the fact that it is inappropriate for companies to discuss society and business as independent structures in a negative context. It is important to focus on the interdependence of societies and companies because the effective strategy or framework related to corporate social responsibility can improve the organization’s competitiveness. One of the article’s strengths is the analysis of all the aspects associated with the concept of corporate social responsibility. Following the presented analysis, the authors propose an effective framework according to which organizations can achieve a competitive advantage and meet the corporate social responsibility’s demands.
Key Learning Points
The key learning points in the reading are associated with such aspects as
- The discussion of different levels of social responsibility in their interconnection. However, according to the article, the company can achieve the best results when the company focuses on the particular group of responsibilities such as economic, legal, ethical and philanthropic ones;
- corporate social responsibility is based on the idea of completing the stakeholders’ interests, and the main condition for this process is the focus on trust;
- the building of the effective relationships between all the stakeholders depends on using the effective strategy or framework to create the necessary commitment.
Relevant Statements to the Session
The relevant statements to the session include the following ones:
- Social responsibility is the priority for the business leaders because of its role for the community.
- Social responsibility depends on interdependence of society and business.
- Adopting a strategic focus, social responsibility should be strategic and responsive.
Benefits of social responsibility are the possibilities to create shared value and to achieve a competitive advantage.
Critical Analysis
Corporate social responsibility can be discussed as effective when it is characterized by the strategic and responsive components. Being the source of opportunity and innovation, social responsibility is important for the business. Instead of focusing on only uncoordinated initiatives, companies have the opportunity to analyze the positive and negative features of their relations with the society to make decisions and choose the category of responsibilities (economic, legal, ethical and philanthropic) which are important to be followed in the concrete case. Porter and Kramer’s approach to discussing the question of social responsibility is important because they are interested in the positive results, and the authors propose the framework which can be used to create only positive relations between stakeholders.
The authors’ statement that corporations can be successful only when the society within which they operate is healthy is supported by the further discussion of the types of business and society’s relations. Thus, business affects society with references to inside-out linkages, and society can also influence business about outside-in linkages. From this point, focusing on the shared value, companies should analyze the weaknesses in their approach to social responsibility and create the framework to avoid costs but to guarantee advantages. This idea proposed by the authors is important because of responding to the interests of all the parties or stakeholders. Identifying and responding to stakeholders’ issues, companies contribute to their advantages of social responsibility. According to the theory, effective results can be achieved with references to the companies and stakeholders’ mutual goals and trust. Thus, Porter and Kramer’s vision of the social responsibility’s role is correlated with the discussed points.
The example of the relations between Microsoft’s Working Connections and the American Association of Community Colleges is presented in the article. This case can be discussed as effective to demonstrate the significance of the shared value and the provided opportunities. Microsoft’s Working Connections chose to provide the necessary support for the American Association of Community Colleges as their role in the social life and their vision of corporate social responsibility. The provided support is important for the community, and it is realized based on the principles and standards satisfying the needs and expectations of all the parties.
Practical Implications
Emirates Motor Company in Abu Dhabi can be discussed as an appropriate example to discuss the advantages of social responsibility strategies. The company focuses on meeting the interests of stakeholders while providing the workshop training and charity auctions. Having analyzed the needs of the society and the perspectives for the further development of the company, the leaders of Emirates Motor Company chose to focus on philanthropic goals. The response to the philanthropic goals is important for stakeholders because of the community’s progress and for the company because of the possibilities for realizing the strategic potential.
In this case, the framework used by Emirates Motor Company is both responsive and strategic because the company and society act about the interests of all the parties. The community can be satisfied when its interests are not ignored, and needs are met. Emirates Motor Company focuses on these requirements while following the framework of the responsive social responsibility strategy and while concentrating on the generic social issues. On the one hand, generic social issues cannot contribute to the company’s progress. On the other hand, they contribute to creating positive and advantageous relations.
Learning Reflections
The information presented in the article by Porter and Kramer is important to look at the issue of social responsibility from the other point because researchers and practitioners are inclined to focus on the opposition between society and business while discussing the question when the authors of the article argue that companies and society are not only connected but also advantageous for each other. It can be learned with references to the article that the company’s leaders can win while making the right choice and determining the right category to focus on in contributing to the community’s values and stakeholders’ interests.
Thus, the approach to concentrate on social responsibility as associated with the moral obligation is not enough because this concept can be discussed with references to the real competitive advantages or economic profits gained as a result of mutual trust and effective relations between companies and stakeholders.