Table of Contents

1. Introduction
............................................................................................................................. 1
2. Corporate Social Responsibility Strategies
............................................................................. 6
2.1. The Shareholder Strategy
................................................................................................ 6
2.2. The Altruistic Strategy
.................................................................................................... 7
2.3. The Reciprocal Strategy
.................................................................................................. 7
2.4. The Citizenship Strategy
................................................................................................. 8
2.5. CSR Best Practices
.......................................................................................................... 9
3. CSR Push / Pull Factors
........................................................................................................ 10
4. The Organization Performance
.............................................................................................. 14
4.1. The Performance Concept .............................................................................................
14
4.2. Measuring Performance .................................................................................................
14
4.2.1. Financial Performance Measurement (FPM)............................................................. 15
4.2.2. Non-Financial Performance Measurement (NFPM) ................................................. 15
4.3. The Performance Management Concept ....................................................................... 17
5. The Relation between CSR strategy and organization performance ..................................... 18
5.1. Financial Performance
................................................................................................... 19
5.2. Building brand equity through CSR within the market ................................................. 23
5.2.1. Social Approval
......................................................................................................... 26
5.2.2. Self-Respect
............................................................................................................... 26
5.3. Competitive advantage ..................................................................................................
27
5.4. Market and Consumer Attraction ..................................................................................
29
6. Examples of Successful SCR Strategies
................................................................................ 31
7. Conclusion
............................................................................................................................. 34
8. References
............................................................................................................................. 37
1

The Impact of Corporate Social Responsibility Strategies on Organizational

Performance

1. Introduction
After the Enron scandal that took place in the United States in the beginning of

the current century, measures that are taken to achieve more control on organizations
have witnessed major changes. Calls for addressing topics like ethics, accountability
transparent and disclosure have dramatically increased. These calls with others required
organizations to shift their focus towards the society and to outline more social duties and
commitments to the society (Gill, 2008: 452).
The corporate social responsibility notion (CSR) enables organization to handle
the stakeholders' interests more efficiently. Although the term is relatively new within the
management vocabulary, the concept itself is not new. It was first implemented in
Hammurabi code. (Nehme & Wee, 2008: 143)
Different organizations have different reasons to implement corporate social
responsibility approaches. Some organizations use SCR actions willingly but others need
to be forced to through economics reasons that drives them to make use of the benefits of
implementing CSR approach (Nehme & Wee, 2008: 131).
Additionally, it is presumed that once the concept of corporate social
responsibility is implemented within the whole organization, more gains for the
organization will be achieved, for instance, better company image and enhanced
management. Once the approach comes to implementation, improvements would be quite
notable. Organizations will be more successful upon the use CSR activities.
We can say that corporate social responsibility could be justified by the notion
that as long as organizations achieve benefits and make profits as a result of its operations
within a given society and that such operations might cause some harms to the society;
2

therefore, organizations should have sort of responsibilities towards that society as a kind
of compensation. Nevertheless, even if the organizations operations do not shape any
kind of risk to the society, still they are required to have some pay-offs to the society as a
sort of courtesy towards the society that contributed in the success of the organization.
(Nehme & Wee, 2008: 131).
Mohr & Webb (2005: 121) cited from Mohr, Webb, and Harris (2001, 47) that corporate
social responsibility is the organization's devotion to cut down and eliminate effects that
touch humans and which results from its operation and augment, as much as possible, the
positive effect on the society. It is as simple as that being social responsible means that
corporations behave in an ethical way, sponsor charitable organizations and activities,
treat their employees in a fair way and keep the damage they cause to the environment at
the minimum.
Many organizations are now conscious of CSR concept. Some corporate
executives were interviewed in 2005 where 88% of them stressed that CSR has become
an integral part of making the decisions in their firms (Nehme & Wee, 2008: 131).
Another study (The Cone Corporate Citizenship Study: 2002) proved that 89% of
Americans commented after infamous scandals of US organizations that it was time for
them to become more social responsible (Mohr & Webb, 2005: 121).
Despite the fore mentioned, the term Corporate Social Responsibility is still
unclear. In other words, it is still an unexcavated area so far where its boundaries are not
clear yet in addition to the uncertainty that accompanies it. Some forms of corporate
social responsibility stress the adherence of the corporate to business spirit in addition to
compliance with laws controlling that kind of business. These forms of corporate
indicate that corporate social responsibility is a policy that the organization can adopt to
consider the measures that affect the stakeholder (Nehme & Wee, 2008: 131).

Some observers still suggest that Corporate Social Responsibility necessitate

major changes. Vogel (2005: 9) assures those observers that Corporate Social
3

Responsibility does not need major changes and its implementation is very natural. He
comforted those who believe that corporations, in its way to earn profit, cannot behave in
an ideal way with more responsibility that this point of view is quiet pessimistic and that
corporations can behave in contrary to that. CSR is a matter of reality and has practical
vitality, value or influence.
The increasing of organizations collapse events as a result of dishonesty,
deception, and careless actions of the financial organizations, all develop, and increase
the need of social responsibility within organizations and becomes a must. The collapse
of the great companies as Enron, Worldcom, and HIH has spotted light on the role of
corporate social responsibility and stressed on its importance. Moreover, the recent
collapse of Lehman Brothers and the rise of the global financial crisis have shown the
suspicious activities of some financial organizations. This calls for new regulation to
achieve what called financial stability (Nehme & Wee, 2008: 130-131).
In an industrial field corporate social responsibility could differentiate a given a
company than its competitors and give the company the chance to have a competitive
edge. In many automobile companies they succeeded to establish a competitive edge
through the use of CSR principles. Volvo, for instance, was able to construct a
competitive advantage as they placed safety in the central focus of their attention. On the
other hand Toyota was able to build its competitive edge on the environmental concerns
which led them to hybrid technology which reduced the emissions of fumes into the air,
such technology benefited the environment greatly, yet, it benefited Toyota more (Porter
& Kramer, 2006: 85, 88).
A study conducted by Crowford and Mathews (2001) concluded that the
customers pay more concerns getting fair and honest prices rather than getting least
prices. Another study conducted by Auger et al revealed that the customers are ready to
pay more for ethically produced products. Researchers argued that when customers
recognize companies with ethical policies, they become more loyal to these companies
and recommend them to other customers.
4

On the other hand, one of the important factors of management research is the
organizational performance which is a very significant aspect for the success of the
commercial project. Organizational performance can also be valuable to variety of
stakeholders and to what degree these factors are important is conditional on the firms
activities (Devinney, Richard, Yip & Johnson, 2005: 1). There is a general vision in the
middle of all researchers that the main entrance to higher performance is to achieve a
competitive advantage (Phillips, 1999: 360).
Today, there is an increasing interest in the organizational performance in all its
forms and aspects. Evidences on this interest appear in the substantial attention the topic
receives from both the practitioners and academics due to their contributions made to the
field (Thorpe & Beasley, 2004: 334).
Performance management represents high significance to organizations as it is
viewed as a major element to the long term success of any organization especially within
the current global recession due to the global financial crisis and its effects on the global
economies. However, it is commonly known that there is no one model that suits every

organization. Yet, there is a common frame that each organization can follow to adopt the
strategy that fits the organization best. Nevertheless, it is a quite challenging task to adopt
a strategy the fits all the variables of the business environment such as the current
position of the organizations life cycle, the type of business, the governmental
regulations, the organization culture and the abilities of both employees and managers.
(Equate Petrochemical, 2009: 7)
The topic of performance management is used in business schools as an
integrating tool that links the practical useful techniques to the theoretical. As a result, the
focus of the studies has shifted from simple practices to more towards theories. Such shift
is crucial for academics who are required to hold a position that allows them to better
realize and know both the theoretical and experimental foundation of the principles of
performance, the concepts, their beginnings, their development and their changes.
(Thorpe & Beasley, 2004: 334-335)
5

Managers should work to magnify the value of corporations by directing the short
time performance along with the long time one. This is similar to the skill to execute and
observe the preface of the management practices that make them able to maintain this
performance on the long run. This may be as thought the cause of the high levels of the
expansion in the economy in Japan from 1960s to 1970s. The high levels of the economic
expansion in Japan during this period may return to the success of the performances of
Japanese administration based upon the performances of the employees like the high
obligations of the strategies of the human resources along with the engagement of the
workers for a more noticeable historic perception concerning the running of the
performance and its evaluation through operations management across all sectors, i.e.
manufacturing, services and public). According to such thread of literature, there is a
hidden conviction that the performances of the management result in more effective and
successful organizations (Battisti & Iona, 2009).
Although a body of literature addressed the topic of corporate social responsibility
and its impact on several aspects within the organization, we found a few literatures that
address the impact of corporate social responsibility strategies on the organizational
performance. Moreover, the significance of the topic of organizational performance
especially in light of the current fierce competition within business organizations and the
need to improve organizational performance, the researcher decided to conduct the
current study in order to explore the impact of implementing corporate social
responsibility strategies on the organizational performance. The first part of the study
addresses the corporate social responsibility as an independent variable while the next
part addresses the organization performance as a dependant variable. Finally, the relation
and the impact of the implementation of corporate social responsibility strategies on the
organization performance will be discussed.
6

2. Corporate Social Responsibility Strategies

The focus of corporate Social Responsibility has been on how business
contributed in the society and the strategy of the firms social responsibility. The
relationship between the firms social responsibility and performance of the firm has been
the subject of numerous theory developments in addition to other practical investigations.
Nevertheless, at the empirical level, misunderstandings still exist in regard to the ways of

incorporating CSR into the general policy of the firm. For instance, CEOs fully
understand the importance of societal expectations in the achievements of the firm;
however, they are still not sure how to implement those strategies into the general policy
of the firm. Most reports have found that almost half of the corporations do not have a
CSR policy while many others do not have a suitable level of anticipation to the type of
social issues that would affect the firms general policy. Several common theories of SCR
seem to not have succeeded to be adapted within the overall objectives of the firm
(Galbreath, 2009: 109). In regard to corporate strategy, there has been a description of
four options including: the shareholder strategy, the altruistic strategy, the reciprocal
strategy, and the citizenship strategy (Galbreath, 2006: 176).
2.1. The Shareholder Strategy
The shareholders strategy refers to being as an element incorporated within the
overall profit achievement motive which mainly focuses on enlarging the shareholders
profits. The economist Milton Friedman strongly agrees with this strategy as he debated
that the only responsibility of a corporation is to offer employment opportunities, serve
the customers with the goods and services they need, pay its taxes, achieve financial
profits through meeting the least legal requirements for operation and through getting
involved in open and liberated competitiveness without any type of deceit. Friedman was,
however, much concerned with the increasing CSR requirements. He continued to argue
that through achieving the maximum profit for the investor, the profits achieved will
consequently be able to meet responsibilities that could be related to the community in
which the firm operates. Therefore, a firm that is able to achieve its main target which is
enlarging its profits will be able to participate in the welfare of the society. Nevertheless,
all types of environmental and labor measures or legal actions may act as a motivation for
7

firms to pursue certain CSR policies (Walton, 1982; Kok et al., 2001; Waddock et al.,
2002). As far as economic policies, its the policy of shareholders toward CSR is never
mainly based on long-term objectives as this policy basically targets producing better
financial achievements during any period of time (Galbreath, 2006: 176).
2.2. The Altruistic Strategy
It has been commonly thought that corporations have no responsibility toward the
society. Furthermore, the responsibility of social responsibility is directly related to the
firms managers. Even though the firm is thought of as an unreal individual (Wokutch,
1990: 59), and this individual is capable of doing harmful or harmless actions, the
managers are certainly responsible of directing the firms societal behaviors. Therefore,
the values and traits of managers, as well as their religious faiths, tell many things
concerning how the firm responds to their societal responsibilities which may be seen as
irrelevant to the objective of financial profit achievement (Hemingway & Maclagan,
2004: 37). The altruistic strategy the mutual relationship between the firm and the society
is well recognized. In addition, the firm acts as a member of the community that is fully
aware of its duty that it should pay some sort of charity back to the society in which it
operates. By nature, any charity contribution paid by the firm comes from additional
profits of the firm and is given out in accordance to the various social moral and qualities
that lie within the society. The contribution may be directed towards educational,
recreational, or cultural fields (Carroll, 1979: 500). Inspite of the difficulty of identifying
the main reasons (Hemingway & Maclagan, 2004: 34), this strategy refers to being able
to do the right thing through paying the community back with no expectations of

anything in return. From a legal perspective, the strategy acts as presentation of good
intentions exhibited by the firm. Finally, corporations that adopt this strategy may have
some sort of participation to certain social issues temporarily or in a habitual form
(Galbreath, 2006: 177).
2.3. The Reciprocal Strategy
This strategy is best described as being liberal and pragmatic as it tries to put an
end to the struggle between the financial economic objectives of the firm and the
8

different societal and environmental requirements of the society. In light of the image of
business in the eyes of the public, the modern society appears to grant a firms existence
in case the firm fulfills its social responsibilities as incorporated in its overall policy.
Therefore, this strategy indicates a mutual connection and a dual objective: become
beneficial to the society while serving the economic purposes of the firm. For instance, a
firm that operates in an environmentally respective manner that meets with the legal
requirements not only does it positively contribute the welfare of the society but also it is
less possible exposed to legal intervention which contributes to its positive economic
standing (Galbreath, 2006: 178). In more meaningful terms, a pharmaceuticals
corporation may give much concern to some health-care relevant issue and that would
positively contribute to the society and gives a sign that the firm is a thoughtful employer
(Waddock et al., 2002: 135).
Within this strategy, CSR is clearly based and is strongly related to the main
business performance and is well managed for both societal and economic benefits. In
order to assess the outcomes, the type of reporting that is based on practical practices is
highly required as firms are highly attracted to certain bottom line benefits. This strategy
does not require public disclosure, yet it is favorable to conduct activity- based reporting
which permits the firm to keep track of a specific CSR investment and evaluates the
outcome of such contribution (Galbreath, 2006: 178).
2.4. The Citizenship Strategy
This strategy has a much wider vision towards CSR than the other strategies. The
citizenship strategy states that corporations understands that different stakeholders
possess their own interests and anticipations that might include customers, suppliers,
certain groups, shareholders, the environmental issues, etc. It is worth noting that during
the 1940s, a number of researchers suggested considering the firm as a citizen in the
society (Drucker, 1946: 137) that is responsible to other fellow citizens of the society.
Therefore, this strategy understands its responsibilities to the prospective citizens who are
not shareholders as well as its internal elements (Dawkins & Lewis, 2003: 191).
9

It is affirmative that various elements that are directly influenced by or have some
type of interest in a corporation have their requirements and balancing between these
requirements has been a characteristic of this strategy. Nevertheless, stakeholders are
more demanding and a firm is not obligated to equalize between all stakeholders (Sethi,
2003: 23) and, therefore, a firm may classify its stakeholders according to their
importance (Clarkson, 1995: 105).
The citizenship strategy states that firms are in continuous negotiation with
stakeholders and, if possible, would incorporate their findings into their overall policies.
Therefore, the needs of stakeholders are considered into corporate strategy and the social
goals are associated with the firms economic objectives. However, it is somehow

difficult to satisfy all stakeholders requirements and, therefore, the possible outcomes of
citizenship may not be brought to vision within a short time. Thus, the citizenship
strategy is a long-term strategy and is able to create ways to manage and evaluate their
level of responsibility to their stakeholders. In more meaningful terms, firms with
citizenship strategy are often disclosed in regard to CSR through several ways that might
include corporate web sites or separate triple bottom line reports (Galbreath, 2006: 178).
It has been proved that this strategy can offer substantial outcome that could be enlarged
financial outcomes in addition to good reputations (Margolis & Walsh, 2003: 290)
2.5. CSR Best Practices
A well-structured corporate governance guarantees that proper and truthful
disclosure is conducted in regard to all issue related to the firm, in terms of the economic
standing, performance, possession, and governance of the organization. A well-managed
disclosure is fundamental in observations based on the market and is crucial in regard to
the capability of stakeholders to practice their voting rights (OECD, 1999). Disclosure
can also lead to a better level of understanding by the public of the framework and
activities of the businesses, strategies and performance in regard to the environment,
ethics, and the relationships between companies and the communities in which firms
operate which improves the societal bonds (Oketch, 2005: 35).
10

The non-profit contribution by firms to some type of social or environmental

occurrences mainly target improving the firms corporate image. At the best cases, CSR
may be considered as the first step that should be taken by a business toward a
sustainable existence. Corporate social responsibility has various indications to various
segments of the society. Canadian Business for Social Responsibility (CBSR), which is a
business scheme aiming at enhancing CSR in Canada including some major business
firms such as Nike, Alcan, Scotiabank, and DuPont. Within the CBSR, CSR is defined as
the commitment of a firm to conduct its business in accordance to the economical, social,
and environmental standards that would ensure a sustainable existence for the firm;
meantime, a firm is demanded to consider the interests of its associates and stakeholders
that include investors, consumers, staff members, business associates, societies, the
environment, and the society in general (Berkhout, 2005: 15).
The organization for economic Co-operation and Development (OECD; 1999) has
suggested four CSR factors:
1- Innovated interests and anticipations from people, public authorities, and
capitalists within the new globalized industrial context.
2- Social decisive factors are becoming more influential over the investment
tendencies of consumers and investors.
3- Increasing levels of concern in regard to the unfavorable impact on environment
have led to a more economic active atmosphere.
4- Media and latest communication and information technology have caused various
business activities to become publicly known (Oketch, 2005: 31).

3. CSR Push / Pull Factors

Several organizations have become aware of Corporate Social responsibility
concept. In an interview that was conducted in 2005 for corporate executives, 88 % of
them pointed out that corporate social responsibility became an integral part of the
decision making process in their organizations (Nehme & Wee, 2008: 131). Another

11

study (The Cone Corporate Citizenship Study: 2002) concluded that 89% of Americans
stated after the notorious scandals of the US companies that it was high time for The US
companies to become more socially responsible (Mohr & Webb, 2005: 121).
Yet, for many other companies, the term Corporate Social Responsibility is still a
vague one. In other words, it is still an unexplored area where its limits are not clearly in
addition to the uncertainty that accompany its role within the organization. Some
descriptions of the corporate social responsibility focus on the compliance of the
corporate with the business spirit as well as adhering to the legislative laws that controls
such business. These descriptions imply that corporate social responsibility is just an
approach the organization can follow to consider the activities that influence the
stakeholders (Nehme & Wee, 2008: 131).
Still, some observers believe that Corporate Social Responsibility requires major
changes. Vogel (2005: 9) assures for those observers that Corporate Social Responsibility
does not require major changes and its implementation is quite close to reality. He
soothed those who believe that corporations, while seeking profits, cannot behave with
integrity and more responsibility that this view is quite pessimistic and that corporations
can behave exactly the opposite. Corporate Social Responsibility is factual and having
practical importance, value, or effect (Vogel, 2005: 9).
The Social Legitimacy Theory suggests that one of the reason that drive the
company to adopt CSR is its willingness to show that it acts in a convenient, right, ethical
way. The company in this case works on three levels: the practical, the moral and the
cognitive. The company would justify its adaptation to the CSR concept not for the
economic benefits but rather in response to the surrounding society demands. The
company's operations cause some damage or incremental cost that the society bears,
therefore, the company should compensate the society for its action through the
adaptation of the corporate social responsibility concept (Gyves & O'Higgins, 2008: 208).
12

In order to understand the need for corporate social responsibility, examples from
real life situation from the United States might help in this regard. Before the collapse of
Enron and its appearance on most newspapers headlines worldwide, there were many
indications that the American public was increasingly dissatisfied with the manners of
conducting business of the American companies. A survey that was conducted by the
Business Week revealed that 72 % of the respondents believed that business in the United
Sates has excessive influence on the American life. Furthermore, 66 % of the respondents
believed that companies in the United States are keen on achieving tremendous profits on
the expenses of providing safe, reliable, and high quality products. Moreover, there was a
rising pressure on companies to assume more social responsibilities. For instance, in a
global survey that was conducted in 1999 it was found out that two out of every three
consumers coveted that companies should take part in greater social targets. Then came
the Enron scandal which shed light on the practices of the companies conducting business
in the United States. Consequently, in a study (the Cone Corporate Citizenship Study)
that was conducted in 2002 after the scandals of some monster companies within the
United States, 89 % of the Americans agreed that it was high time for companies to take
corrective measures and to become more socially responsible. As a result, companies
started to act in response such pressures and demands. Several companies shifted their
marketing efforts from focusing on increasing sales to enhancing the corporate images

and to maintain better relationships with their current and potential customers (Mohr &
Webb, 2005: 121).
However, still the argue continues about the need for corporate social
responsibility. The rejection to the concept of corporate social responsibility is based on
several factors. These factors include that what can be applied on human individual
cannot be applied on corporations because they are different and thus corporate cannot be
asked to have social responsibilities. Other opposing stood on the ground that
organizations' managers are assigned in their positions to work in the sake of the
stockholders and thus they are required and expected to do their best to maximize the
wealth of the stockholders, in addition, the managers are not entitled to spend the money
of the stockholders on matters that do not generate profits. Eventually, what the
13

organizations are required to perform in relation to the social duties is not clear due to the
differences in judgment about what is good and what is not. In other words, what can be
considered good from one point of view can be considered as evil in another viewpoint
(Nehme & Wee, 2008: 132). This came in line with the views of the neoclassical view of
the organization as a group of assumption that the lone liability against the organization is
increase the affluence of its shareholder. Those who adopt this point of view believe that
it is quite impossible for firms to pursue two opposing goals (interest of shareholder and
society interest) and that organizations are already assuming their most possible social
liability by maximizing the organizations values which in turn would benefit the
consumers. They may go to the extreme that any attempt to pursue social values is
equivalent to stealing money from the shareholders (Gyves & O'Higgins, 2008: 208).
At the time that corporate social responsibility in gaining more global interest,
still a growing body of opposition exists. Such opposition view corporate social
responsibility as a legend rather than reality and again, the criticism to corporate social
responsibility focuses on the necessity that corporations should not deviate from their
main target that serves the objectives of shareholders. Other criticism that targeted
corporate social responsibility varied from accusing it of being bad capitalism trend,
drawback rather than development, and it does not deserve the time allocated to consider
(Raman, 2007: 105).
One of the major problems that face any given company that is interested in
implementing the principles of Corporate Social Responsibility is finding the right
balance between the targeted social and environmental duties and its main target with
economic nature which is to generate profits. Sometimes the cost of implementing the
CSR principles exceeds the achieved benefit. In this case most companies will stop the
adaptation of the CSR principles. Thus, it is note-worthy to point out that companies
would remain using the CSR principles as long as theses principle would not lead to loses
(Berkhout, T., 2005: 17).
14

Companies sometimes, exert great efforts trying to compromise the social

demands with the demands of the shareholders to maximize profits. Several studies that
addressed the topic of Corporate Social Responsibility concluded that there is a relation
between the social activities the company perform and the financial performance of the
company. However, the returns of the implementation of the Corporate Social
Responsibility are not granted. For this exact reason, many managers view Corporate
Social Responsibility as expenditure rather than an investment (Mohr & Webb, 2005:

122).

4. The Organization Performance

4.1. The Performance Concept
For the purpose of exploring the issue of learning organization and how it affects
the performance of an organization, the subject of organizational performance and how to
assess and manage this aspect become significant. As an attempt to clarify the subject, it
is worth noting the CEOs are mainly looking at improving the firms capability to have a
competitive standing within the market and to its competitors, meet the demands of
consumers, in addition to other aspects. Therefore, it is important for a firm to recognize
its level in comparison to other firms and how performance is managed in these firms.
That is, management is where organizational performance is highly considered
(Devinney, Richard, Yip & Johnson, 2005: 1).
4.2. Measuring Performance
Techniques of action assessment are considered by management in various industrial
fields. Performance assessment has increasingly come to the center of attention due to the
change from locally operating to the new globalized business atmosphere which led firms
to do their best to enhance and to innovate policies and strategies to achieve their
strategic objectives (Evans, 2005: 377). In order to evaluate performance, firms have the
privilege to choose between one or more ways of performance assessment such as
assessment by using financial performance measurement (FPM), non-financial
15

performance measurement (NFPM), and a multidimensional way in which both financial

and non-financial performance measurements are integrated.
4.2.1. Financial Performance Measurement (FPM)
PM traditional theory has been one way of maintaining the control of
management and the financial objectives adopted by industrialized organizations. These
conventional means of PM were mainly used to stress the importance of increasing the
shareholders outcomes such as earning per share (EPS), return on investment, which is
defined as the outcome of managerial activities, regardless of performance level. Several
modern accounting researchers found that the traditional accounting and accountingbased
PM are inaccurate and resulted in unclear financial and incomprehensive
competitive contexts (Hussain, 2005: 567).
Financial performance measurement such as profits, sales, return generated, rate
of income, etc are unquestionably important. Moreover, it is undeniable that nonfinancial
performance measurement is also vital; however, several studies have found that
NFPs such as quality, customer satisfaction, etc are not of the same level of importance
as the FPs. Furthermore, NFPs that are associated with improving the economic
performance, e.g. customer satisfaction, obtain relatively higher accurate outcome than
those of NFPs which are not in direct connection to production and efficiency, e.g. social
and environmental reliability (Hussain & Gunasekaran, 2002: 243).
4.2.2. Non-Financial Performance Measurement (NFPM)
The Balanced Score Cards (BSC) was one significant way of assessment that
resulted from the increasing awareness of how important it is to find a way to evaluate
performance in order to limit the complexity of having more than one assessment means
to measure the organizations performance. Within the modern world of business, it is
increasingly uneasy to assess the competitive performance due to the unclear outcomes

which are overwhelmed by the demands of stakeholders groups. This issue was
introduced in several studies as one means of assessment can never be adequate to
evaluate the competitive standing of any firm. It can be argued that such means of
16

measurement is accurate within the service sector as it highlights the human resources
and the difficulties that result from the inadequacy of steady production norms (Evans,
2005: 378).
Several advantages have been concluded for the non-financial measurements for
their direct relation to the strategy such as being the major factors in the achievements of
a firm. In addition, performance measurement has been often challenged by the
limitations of the financial information. Unfortunately, there is irrelevance of measures
within the financial performance measurements as there is a very long time in regard to
the accounting period and the excessiveness of summarization (Harris & Mongiello,
2001: 120).
Financial performance conventional assessment, such as return on investment
(ROI) is vital activities of administrative performance. On the contrary, an increasing
emphasis on ROI could easily create inefficient performance. For example, ROI can
result an emphasis on a segmental production rather than stressing the overall
productivity of the firm which encourages managers to focus on short-term benefits
rather than long-term achievements. Therefore, such inefficiencies of accounting-based
performance measurement have led to a contradiction of improvements. The balance of
outcome would likely to be favored by directors as they likely prefer to benefit from the
total amount of cash rather than focus on the proportion ROI. The worth of cost-effective
is the accurate type of remaining profits that has been the center of attention recently. A
case study that was conducted in 1995 named three key factors for the fast expansion in
using non-financial measures. First, in addition to the previously stated negatives,
accounting-based measures seem to look at various issues reversely and suggest
inadequacy of control as the main reasons for complexities. Furthermore, the unstable
exterior atmosphere has led leaders to recognize the charge that is able to guide us to
competitive outcomes. Finally, nonfinancial performance measures have been considered
as a key element of business proposals such as total quality management (Phillips, 1999:
359-360).
17

Those previously mentioned negatives have given us a briefing about profit-based

performance measures that leads to the lack of being impartial. Furthermore, financialbased
performance measures strongly call for short-term objectives and lack an accurate
manner of assessment and improvement of performance systems. Thus, directors were
recently faced with several to-date performance measurement perceptions such as critical
achievement factors, results and determinations, balanced scorecards, and strategic cost
management (Harris & Mongiello, 2001: 120).
4.3. The Performance Management Concept
A definition of performance management states that it is a steady process of
defining, evaluating, and promoting the performance of individuals and groups and
adapting performance to the strategic objectives of an organization (Aguinis, 2009b: p 2).
The definition identifies performance management as including two key elements;
the first of them is maintenance of the process of managing performance, which indicates
that the process is everlasting and that it includes continuous efforts to establish the goals,

supervising the performance of the employees, and managing performance measurement

which involves assessing occasional performance and does not propose training of
employees. The second element tackles the managerial role as to confirm that the
performance of the employees is relevant to the objectives of the firm which, in turn,
enables the achievement of the organizational competitive advantage (Aguinis, 2009b: 2).
Considerable attention has been paid to performance management as part of the
world of business. Organizations and firms have highly considered PM as one key factor
with a major role to the long-term organizational achievements. Such significance has
recently grown in terms of the global financial calamity which greatly affected economies
worldwide (Equate Petrochemical, 2009: 7).
Performance management has been used as a means to evaluate performance. In
addition, it enhances trust that leads to better communication and more honest and
productive firms. One very important factor of PM is that it motivates firms to switch the
18

attention from the assessment approach to a more comprehensive structure of

performance management. This ensures the promotion of the employees performance
(Rao, 2004b: 4).
The execution of performance management techniques give a great opportunity for
employees and managers to implement the process of total comprehension in regard to
their duties in the firm which is defined as liability. Such execution would also offer
assistance in determining goals that are measurable as to improve communication of
ideas relevant to performance. Furthermore, they help managers realize the progress and
the achievements of employees and define the rewarding system that aligns with the
improvement (Macaulay & Cook, 1994).
Performance management is also seen as one key element contributing to an
ongoing and sustained organizational achievement. Riley (2009) added that,
hypothetically, most industries can benefit from performance management systems which
assists the enhancing of accomplishing the goals such as flexibility while maintaining the
goals of decreasing the dependence on manpower. Furthermore, performance
measurement holds several main elements such as validity, accountability, awareness,
and accessibility. It is a perception relevant to management. That is performance
management is integrated with the process of making decisions, and it is a process of
making use of the data taken out from the performance management to set decisions on
these measurements (Lichiello & Turnock, 1999: 13).

5. The Relation between CSR strategy and organization performance

The present international financial standing has obliged firms to steadily enhance their
performance while considering the various regulations within the different markets.
Meantime, the demands of customers in major global markets that firms promote the
quality of their products and services in accordance to the societal and 0020
environmental codes if those firms are planning to sustain competiveness in their
international markets. Stakeholders such as suppliers, official agencies, and other major
partners have paid more attention to the reputation of the firm when they get to choose a
19

firm to deal with. Such requirements have urged firms to enhance their economic and
environmental performances through seeking creative ways to promote their
environmental and green marketing as a source of promoting their reputations and

competitiveness and, by nature, their financial performances (Miles & Covin, 2000: 299).
Swaen (2003: 7) also argued that CSR can act as an element of attraction to both
stakeholders and societies but unattractive to firms leaders until economic benefits have
been achieved.
5.1. Financial Performance
The questionable results of any hypothetical findings in regard to the association
between corporate social performance CSP and corporate financial performance CFP
have been steadily perceived as debated to date. Arguments debated that thirty years of
practical research and study concerning this relationship have resulted in pointless and
non-connected models. Moreover, several descriptive reviews and notions have
suggested theoretical explanations for a fundamental relationship between CSP and CFP,
yet comprehensive outcomes have not been reached (Orlitzky et al., 2003:. 404).
Stock-market-based variables have been utilized and came out with various
outcomes in regard to the association between social responsibility and performance.
Moskowitz (1972: 71) classified 67 firms according to his assessment of the firms level
of social responsibility and a high rate of stock returns for those top classified firms.
Vance (1975: 19) nevertheless, a separate group of firms ranked by Moskowitz was
found to obtain a lower rate of stock-market performance than another group of firms that
existed on the list of New York Stock Exchange Composite Index, Dow Jones
Industrials, and Standard and Poors Industrials. Studies conducted by Vance and
Moskowitz that targeted the evaluation of stock-return performance were fruitless, while
other studies in the same regard found minor association between social responsibility
and market performance. Alexander & Bucholtz (1978: 854), reached little connection
between social responsibility and risk-adjusted return on securities among those firms
listed by Moskowitz.
20

The various outcomes of studies and researches lead to the fact that 35 years of
attempts to find a relatively fruitless in regard to the various financial impacts of
corporate responsibility related issues. In terms of contents of the relationship, it should
be seen as significant for both the foreseen results and the better understanding of the
causal associations between corporate responsibility and financial performance (see also
Rowley & Berman, 2000). The current study that focused on the financial effects of
corporate responsibility from the perspective that assumes that differences exist between
issues and that some models could be reached guided by those differences (Lankoski,
2009: 207)
Milton Friedman (1970) stated that the direst conclusions of Rothchild sums up the
side of the argument that debated that persisting a social program within the capital
market requires a type of financial cession. When firms operates in accordance to a social
agenda by means of corporate charity, employs day care, remunerated parental leave, in
addition to other programs of the same type, costs clearly increase and a disadvantageous
economic standing is suffered. Collectively, firms with SRI finances are likely to be
subjected to higher rates of operation costs; moreover, the availability of investments for
those firms is restricted. SRI funds are mainly limited within small separate choices of
investments and, thus, disorganized risk rate increases. REACHES general societal
contribution is estimated to be one percent annually (Barnett & Salomon, 2002: b1).
On the contrary, several researchers that addressed the issue of social responsibility
and performance have debated that a constructive relationship should be concluded.

Reports of employee and consumer welfare and support as a result of social responsibility
have been referred to; an example could be the decrease in working station problems and
the satisfaction of consumers toward the products could be the result of a positive
contribution by a firm into social responsibility relevant activities. In addition, such
positive social responsibility could function as an element of attraction to significant
associates such as bankers, capitalists, and government officials with whom a concrete
relationship could serve the financial benefits of the firm. By nature, banks and other
financial and lending institutions have expressed certain social considerations when
21

making investment decisions. A firm with high level of social responsibility would often
experience an enhanced access to sources of investment (McGuire et al., 1988: 855).
Finally, the latest notion of corporate stakeholder argues that the perception of a firm
is accounted for the expenditure on both explicit and implicit demands (Cornell &
Shapiro, 1987: 6). Having their announced demands from the firm, stakeholders, in
addition to stockholders and bondholders, would rightfully claim for payment contracts
with those in contract agreements with the firm, including quality service and social
responsibility as an example. Behaving in a non-social responsibility compliant manner
would lead those in implicit contracts to demand to convert to explicit contacts which are
of higher costs to the firms. For instance, a firm that does not meet the obligations and
promises of favorable environmental activities would be subjected to a higher level of
strict regulations through committing the firm to explicit contracts obliging the firm to
behave in a favorable environmental manner. Furthermore, unfavorable social
responsibility behavior might lead to a state of doubt by stakeholders if the firm would
respect their demands. Therefore, firms behaving in a favorable social manner would
indeed enjoy implicit demands of lower costs compared to other firms and, thus, an
advantageous financial performance can be achieved (McGuire et al., 1988: 856).
Even though the main focus of theoretical works have been on the association
between corporate social responsibility and economic performance related measures,
several debates in regard to the relationship between social responsibility and these
financial risk measures stated that such association could be considered as a variable in
financial profits and in stock returns (Spicer, 1978: 109). Inadequate contribution by
firms in regard to social responsibility may lead to a raise in the rats of the firms
financial risk. Management skills in those firms perceived as of low social responsibility
are, consequently, seen as low leveled by investors and investments in these firms are
considered as at higher risk. Investors, in addition to other associates, would also expect a
raise in costs due to such irresponsible social participation. For instance, firms of such
non-responsibility, e.g. pharmaceutical and chemical firms, would have to pay on fines
and law suits that would endanger the existence of those firms. Viewing a firm as non22
social responsible could also lead to an unsteady rate of capital possession (McGuire et
al., 1988: 856).
A society is where firms operate and they are committed to both stockholders and
stakeholders. Costs can be decreased as a result of high levels of social contribution
through improving the relationship between the firm and its main stakeholders. A high
level of compliance to the social responsibility criteria would form a type of protection
against unpredicted complexities and firms could even become advantageous over other
irresponsible socially firms. Generally speaking, a behavior of high level of social
responsibility is an advantage for the firm (Porter, 1991) and would function as an

alternative for the fundamental management capability. Therefore, SRI finance is drawn
from the wealthier group of firms that are likely to be those firms with best performance
on long-terms basis. Furthermore, finance managers are able to collect valuable data
concerning specific firms and the market in general. Therefore, SRI finance managers
would get involved in more efficient operations and are able to have more advantageous
opportunities than the competitive firms (Barnett & Salomon, 2002: b1).
Additionally, a firm of high commitment to social responsibility is capable of
decreasing low financial risk resulting from the strong relationship with the officials and
the financial community in general. Moreover, those firms of high level of contribution in
socially relevant activities could enjoy relevantly low rate of debt to assets which
guarantees that the firm would maintain its performance in favor of its implicit demands.
Therefore, socially responsible firms would relatively enjoy low rate of market and
accounting- based risk as they are not very much exposed to the external occurrences
such as the governmental measures and would enjoy low debts. The economic
performance of socially responsible firms would certainly affect the growing social
strategy and activities. Charitable spending and strategies may be easily affected by any
type of loose resources. In case a firm thinks of the costs of corporate social
responsibility as important, the firm ia more capable of absorbing those costs on the long
terms. In contrary, less economic beneficial firms are less capable of assuming their
responsible activities (McGuire et al., 1988: 857).
23

5.2. Building brand equity through CSR within the market

Corporate societal marketing (CSM) programs are increasingly used as a result of
their distinguished potentials (Hoeffler & Keller, 2002: 78). Corporate societal marketing
is known to icorporate various marketing policies that obtain a minmum of one nonfinancial
objective relevant to social wellbeing and make use of the firms resources
and/or one of its associates (Drumwright and Murphy 2001: 164). One main factor of the
growth of CSM is the increasing recognition of the customers perception of a firm in
general that a firms contribution in society would certainly promote its competitiveness
and reputation. For instance, the 1999 Cone/Rope Cause-related Trends Report found that
80 percent of the US population think positively of those firms that sponsor some cause
they care about, while an approximate of two thirds of the US population are possibly to
switch to products that are supportive to what they consider as good causes, and almost
three quarters expressed their approval of cause programs as a business policy (Hoeffler
& Keller, 2002: 78).
Establishing a powerful product has been the objective of many firms targeting the
benefits gained behind such objective. Brand equity is best accomplished through various
concepts of product building. Most academic theories explain branding according to the
customers knowledge and how customers behavior changes accordingly. Consumerbased
brand equity is best known as the effect of the customers knowledge of a certain
product on the customers marketing response. The main principle of such type is that the
strength of a certain product is embedded in what the customer has learned, felt, seen,
heard, and other aspects of that sort as an outcome of the customers experience. In more
meaningful terms, the strength of a certain product lies in what the customers believe.
One difficulty of brand building is making sure that customers undergo the right
experience with the brand and the service so the targeted impressions about the products
could be accomplished. In addition, a proper CSM programs could develop various

significant associations to the product. The following section will introduce six ways that
enable a CSM programs to establish a product equity (Hoeffler & Keller, 2002: 79).
- establishing product recognition
24

- promoting the image of the product

- building product reliability
- inducing product impressions
- innovating a sense of product community, and
- suggesting product management
Academically, brand awareness is defined as the ability of the consumer to
remember and become aware of the product. Brand awareness does not only refer to the
consumers knowledge and experience of the product, but also refers to associating the
product name, emblem, and all related appearance marks to a certain link in the
customers minds.
Recognition and recall are two major elements of product awareness. Brand
recognition is defined as the consumers ability to prove previous experience in regard to
the product, whereas brand recall refers to the unconscious recall of the brand from the
customers memory. CSM are proven to enhance the element of brand recognition, yet
not confirmed to be as effective in regard to brand recall. Brand recall mostly depends on
establishing the suitable associations between the product and its category, manner of
consumption, or usage situation. Similar to the process of financing the building of
products, most CSM programs are not mainly designed to create such types of
associations or to incorporate much information about the brand. Meantime, repeated
usage and consumption of a certain product could occur as a result of CSM program
which supports the element of brand recognition (Hoeffler & Keller, 2002: 79).
Brand awareness is one major factor in building brand equity; however it cannot
do everything by itself. Some cases have proven that the interpretation or the image of the
brand could play a role in developing an awareness of a certain brand (Fournier 1998:
366). Improving the image of a brand includes innovating a meaning of the product in
addition to what the brand is known for and what it represents in the minds of customers.
Various types of links, e.g. considerations related to performance or imagery, may create
25

an association with the brand. Brand equity, in specific, requires that the brand has a type
of powerful, preferred, and outstanding association (Keller 1993: 3).
CSM provides various ways to innovate constructive brand differentiation. Most
CSM programs do not consider product-related information; thus, CSM programs would
not be considered to be influential in terms of information of a functional or a
performance nature. However, CSM is capable of creating imagery associations with the
brand, of which two types of associations are (1) user profiles and (2) personality and
values. (Hoeffler & Keller, 2002: 79).
CSM can create a state of favorable impressions and decisions from customers if
the imagery used was of a high quality; in addition customers would get bonded to the
brand if the case is so. For instance, consumers may formulate some opinion that would
go beyond the quality of the product to reflect broader issues that are linked to the firm or
company that produces the brand or offers the service (Brown & Dacin 1997: 70). Brand
reliability indicates how the product is recognized as reliable in terms of proficiency (e.g.
such as being creative and capable of leading the market), credibility (e.g. being trsuty

and caring for customers demands), and friendliness (e.g. being enjoyable and worthy of
spending time). CSM is capable of affecting all three aspects as customers might consider
companies with tendency to adopt in CSM programs as thoughtful about consumers and
likable for selecting the right things to do (Hoeffler & Keller, 2002: 80).
In regard to brand feelings (Kahle, Poulos, and Sukhdial 1988: 40), the two types
of feelings and impressions could be considered as applicable to CSM are (1) social
consent and (2) self confidence. In more meaningful terms, CSM could offer some type
of assistance to customers to develop their self esteem to other individuals and
themselves as well. These two types of feelings are totally dissimilar in the way they are
initiated.
26

5.2.1. Social Approval

Social approval or consent refers to the constructive impression of customers
towards the responses by other people; in a sense, as when customers think favorably of
others looks or conduct. Such consent could result from realizing a consumer is using a
specific product, or in other cases, could be the self-satisfaction of the customer when
using the product. Social favorable impression could surface when CSM is able to create
certain preferred user imagery. For the purpose of bringing these types of feelings into
light, CSM programs could make use of advertisements in order to indicate the brands
association to the customer such as issuing bumper stickers, ribbons, buttons, T-shirts,
etc. The significance of such symbols is associating the product to CSM programs which
improves the status of social approval especially with those products with that are not
likely to develop those feelings (Graeff 1996). (Hoeffler & Keller, 2002: 80).
5.2.2. Self-Respect
Self respect exists when the product become the reason that customers have a
better feeling about themselves. For instance, when customers feel proud or have
achieved some major goal. CSM is able to inspire the public the sense of doing the proper
thing and that customers ought to be proud they have chosen to do such a thing. The
emblems and advertisements are not of same significance as creating times of self
satisfaction. Such types of feelings and experiences often reflect successful means of
communications that bring up constructive results when associated with the cause
program. One way to stress the participation of consumers is to advise customers with
specific activities that could be considered as objectives of customers, e.g. get customers
to participate in some charity activity as offering donations (Hoeffler & Keller, 2002: 80).
The willingness of customers to exhaust a portion of their time, effort, or money into
the product, beyond buying or consuming the product, can be considered as an ultimate
indication of loyalty to the product. For instance, the selection of customers to become a
member of a club that is sponsored by a brand, practice correspondence with other users
of the same brand as to exchange experiences and views around the brand, visit web sites
that are linked to a certain brand, etc. Active engagement could be reflected through
27

cause-related activities that comprise a CSM program. Customers could even be those
who advertise for the brands when they become as the brands ambassadors and add more
power to the product by establishing communications about the brand. Strategic
volunteerism is one CSM program whereas staff members participate in charity programs
and this would lead to more engagement of customers with both the cause of the program
and the product itself. Whirlpool is an example when the corporation gains benefits of

volunteers who have experiences with its products while they are actually involved with
the cause of the program (Hoeffler & Keller, 2002: 81).
5.3. Competitive advantage
Firms are presently dedicating much concern to corporate social responsible as one
key issue; however, not yet has CSR been central within corporate strategy. One main
complexity is found to be the inadequacy of information about the effect of CSR on the
competitive standing of firms (Vilanova et al., 2008: 57).
One important question that is often raised during debates seeks information if the
execution of CSR has its impact on the competitiveness of rims. Scholars have proposed
that such competitive standing of firms could be one major factor in assuming a CSR
policy. However, there is still unambiguousness in regard to the relationship between
CSR and the competitiveness of firms (Porter and Kramer, 2006: 80).
Nevertheless, the economical performance does not indicate long-term capability to
compete within the market (Porter and Kramer, 2006: 82). Generally speaking, an
obvious relationship between CSR and competitiveness appears to exist, yet the natures
of such association are not yet clear (Vilanova et al., 2008: 57).
For the purpose of exploring the effects of CSR on the competitiveness of firms, we
should start by defining the term of competitiveness. It has been defined as a concept of
several dimensions that is applicable on the levels of country, industry, or firms
(Ambastha and Momaya, 2004). At the level of country, several common signs that
measure and criticize competitiveness leading to a scale of assessment as in the Global
28

Competitiveness Report or the World Competitiveness Yearbook (Vilanova et al., 2008:

57) . Generally speaking, competitiveness is best defined as the relative capability of a
firm to other firms (Murths and Lenway, 1998). Productivity is taken as an indication of
competitiveness by several scholars at the level of a firm (Porter, 1985).
Social responsibility is perceived as one major cause for a long-lasting competitive
benefit as a culture is required to successfully achieve a group of activities. Several
descriptive works have offered considerable support to that notion which states that social
responsibility needs a bundle of activities as in thoroughly examining the forces that can
formulate the anticipated future of the industry. Arguments led by Hamel and Prahalad
(1994) tackled the issue of the intellectuality of collecting information about present and
possible social and political issues, association of stakeholders, handling stakeholders
ambitions, decision making, integrating the decisions into the strategic policy and tactical
activities, linking symbols and marks to stakeholders, and moral and proper business
behavior. Such activities are linked to aspects of various notions of policy that have
become commonly perceived lately such as complicated adaptive systems and strategic
fit (Smith, 2007: 186).
To sum up, various competitiveness definitions, structures, and suggestions have
already been found; however, as shown in figure 1, we suggest that these aspects can be
gathered according to five major dimensions: (1) performance, including a set of
economic measures such as income, expansion, or effectiveness; (2) Quality, of products,
services, and the capability to meet the demands of the customers; (3) Productivity,
relative to a higher rate of production and lower resources exhaust, (4) Innovation, of
products, services, and management operations; (5) Image, in terms of establishing a
trustful relationship and good reputation as perceived by stakeholders (Vilanova et al.,
2008: 58).

29

Fig (1): The five Dimensions of competitiveness, Vilanova et al., 2009: 60

5.4. Market and Consumer Attraction
Reputation is defined as the group of opinions and impressions people, from inside
and outside of the company, hold for the company. Publicly operating firms are often
willing to meet the demands of stakeholders so the firm would be operable throughout the
society. The theory of stakeholders proposes that a firm should consider all differing
demands of associating stakeholders. (Miles & Covin, 2000: 300).
The reputation of the firm is the way it is viewed by its associated stakeholders that
include: (1) owners; (2) community, present and future generations of both local and
international communities; (3) consumers; (4) staff members; (5) suppliers and important
associates; (6) official and non-official agencies; (7) banks and other loaning agencies;
and (8) special interest government-related associations (NGOs) (Miles & Covin, 2000:
300). A good reputation of a firm is considered as concrete advantage that improves the
liability and sustainment of the firm in addition to its ability to improve the quality of the
products (Caves & Porter, 1977: 247). It has been argued by Lusch and Harvey (1994)
that the non-material advantages such as the corporate perception and reputation are
increasingly becoming significant factors in the general performance of firms; in
30

addition, it is debated that the reputation of a firm is an issue of: (1) reliability; (2)
honesty; (3) dependability; and (4) credibility. (Miles & Covin, 2000: 300).
Companies that are capable of producing high-quality products make good use of
honest advertising and behave in accordance to the social and environmental favorable
measures. Those firms would also be known as committed to their stakeholders which
contributes to an establishment of advantageous reputation (Miles & Covin, 2000: 300).
It has been also debated by Swanda (1990: 752) that advantageous reputations have
several constructive effects on the market assessment of firms as capitalists would be
more ensured in regard to their investments with those firms with good reputations for the
low-anticipated risks and the increasing marketing advantages. Good reputations is seen
as advantageous standings that are certainly reflected through pricing steadiness, a better
level of integrity, reduced level of risk, more flexibility in regard to the policies of the
firm, and improved economic performance (Fombrun & Shanley, 1990: 237).
Furthermore, good reputations motivates firms to exert more effort within the markets
through obtaining the opportunity to serve the responsive sectors of the society with
reduced price dealings and a more reduced selling costs. (Miles & Covin, 2000: 300).
The worthiness of well-perceived intentions and good reputations have been
discussed in several researches that suggested the enhancing the reputation of a firm
affects their market values. Benefits of good reputations give marketers the opportunity
to develop beneficial marketing opportunities and to upgrade the market value of the
firm. Figure (1) summarizes the impact of reputational advantage on marketing and
financial performance (Miles & Covin, 2000: 300).
31

Fig (1): Impact of reputation on the market, (Miles & Covin, 2000: 300).

6. Examples of Successful SCR Strategies

Body Shop International (BSI), founded by Anita Roddick, a company that produces
natural soap and lotions in Brighton, UK. Ever since it was founded, the firm has grown
to nearly 2000 stores, of which are 200 in the USA. BSI is operated with a net value of

$250 million, and an annual income of $1.1 million making Anita as the most
economically successful business woman around the globe.
Ever since the company was founded, being socially responsible was a key element
in the strategy of the company. The firms mission announced their objective as dedicated
to the quest of social and environmental welfare. Anita aimed at establishing an
enterprise that would be socially compliant. The main element of the firm strategy was
conducting the business in an ethical manner as she could successfully build up herself
and her firm and could become pioneers in the field of social responsibility. She has been
known as the Mother Theresa of capitalism. BSIs notion of social responsibility is
32

becoming more in the center of constructive attention. To sum up, BSI has been proposed
to become a model in the arena of social responsibility and the business of great ethical
consideration.
BSI has modeled several types of social responsibility considerate behaviors from
the day it was inaugurated; some of which will be introduced throughout this study. To
start with, BSI is known to its great contributions to charity activities. For instance, 3.5
million shares were sold to various foundations that supported child abuse prevention
issues and womens issues. Furthermore, the firm contributed with a percentage of 3% to
charitable issues in 1994, and in 1995 BSI initiated a campaign aiming at fighting
violence at home. This initiative consisted of a number of activities in issues like
employee training programs that included several lectures given by experts in the field of
violence and sexual abuse at home. The firm used all available ways to bring the attention
to their goal and even sent postcards to both the speaker of the White House and the
Senate Majority leader calling for them to financially support violence against women.
Moreover, BSI a program, known as Trade not Aid, that aimed at supporting the
developing nations through conducting trade with them rather than just giving away the
money. In the program, the firm would buy nut oil from villagers who lived in Kayapo
villages in India, whereas villagers who collected the nuts were paid higher charges than
the usual market value. The firm stated that nuts acted as a substitute for the industry of
logging and mining that would put the rain forests in great danger.
The chiefs of the villages were very well pleased with the program as it was a smart
way to have a sustainable income instead of having to work in the city. Moreover, BSI
was able of improving their products through announcing they were natural and not
tested on animals. The spokesman of the company announced that consumers are able to
obtain products that are of high quality and naturally originated and not tested on animals
from a company that has much concern for both the environment and the developing part
of the world. The spokesman continued that the company has reached a point where
33

testing on animals is not longer needed as an alternative way of testing has been
developed and proved effectiveness.
Furthermore, BSI had been known to have much awareness and support to
environmental issues. For instance, the company was the first to support green
packaging as it calls for consumers to recycle product containers and a nickel would be
paid for every single container. The company has also handled the issue of waste water
through setting up a Living Water waste treatment system and became a pioneer in the
arena of industrys environmental issues as it was known as the first international skinandhair organization be socially and environmentally active. As a result of these efforts,

as well as many others, the company obtained the highest ranking in an environmental
British report in the year 1997.
34

7. Conclusion
Milton Friedman said in 1970 that the sole responsibility of any business
corporation was to utilize its recourses in a profit generation activities and to get engaged
in a free competition while adhering to the rules and avoid committing deception or
fraud. Currently, such statement that limited the goal of a corporation to profit generation
would not be accepted. There is a growing trend which suggests that any business
represents a part of a bigger society and does not operate in isolation or in a separate
environment which requires the business to assume more responsibilities that exceed the
narrow scope of just maximizing profits. Firms have responsibilities towards their
shareholders, employees, and stakeholders and failing in meeting such responsibilities
would result in jeopardizing the organization profits on the long term (Oketch, 2005: 31).
Organizations are ought to focus and pay more attention to social issues if they want to
achieve success in the international arena. The need to control organization came to
surface upon the Enron scandal and since then, there has been a growing drift towards
ethical issues within an organization. The concept that has been currently circulating is
that corporate social responsibility creates long term organization sustainability through
investigating the needs of the members of groups dealing with the organization such as
the suppliers, the investors, the customers and the employees (Ketter, 2007: 14).
Since implementing the corporate social responsibility requires upfront costs, it
might be considered as a risk to implement it since this would lead to passing along the
price increase to the customers and thus will result in reduction in the sales figures. Such
fears were argued by many academics. They argued that price sensitivity is just an
assumption although there are some customers who are price sensitive and although there
are some stores that promote price reductions such as Wal-Mart. Nevertheless, this does
not imply that customers are definitely more concerned with lower prices rather than
other factors. A body of studies concluded that customers pay more concerns to getting
fair and honest prices rather than getting the least prices. Another study conducted by
Auger et al revealed that customers are ready to pay more for ethically produced
products. Customers recognize companies with ethical policies; they become more loyal
to these companies and recommend them to other customers. They even would be
35

reluctant to negative publicity that may be linked to these companies. As a result, sales
would increase and more profits will be gained (Mohr & Webb, 2005: 123). A good
example in this regard is Avon which initiated in 1993 a campaign that aimed at
increasing the awareness of breast cancer. The campaign led to a boost in the customers'
as well as the employees' loyalty to the company.
Unfortunately, business strategies are not linked to the Corporate Social
Responsibility approach since the prevailing understanding of CSR hides available
opportunities which a company can make use of. If companies used the same analytical
tools they use to analyze they core business, they would find out that Corporate Social
Responsibility is not just a cost or a donation to charity but it would rather be an
opportunity for growth, innovation and securing a competitive advantage (Porter &
Kramer, 2006: 80).

In an industrial field, Corporate Social Responsibility could differentiate a given

company than its competitors and offer the company opportunities of having a
competitive edge. In the automobile industry, several companies achieved competitive
edge through the use of the principles of CSR. Volvo, for instance, was able to construct
a competitive advantage as they placed safety in the central focus of their attention while
Toyota was able to achieve a competitive edge from the environmental concerns that led
to the introduction of its hybrid technology which reduced the emission of fumes into the
air (Porter & Kramer, 2006: 85, 88). Looking from a broader view, it can be said that
"CSR pays". The list of the top rationales that drive companies to adopt CSR approach
include: profits increase, having access to more capitals through the socially responsible
outlays, reduction in the cost of operation while at the same time achieving boosts in the
operational efficiency, better brand and company image and reputation, more sales, more
customer loyalty, more productivity, sustained ability to attract skilful employees, less
managerial risks and finally achieving competitive advantage.
Corporate social responsibility is viewed as a marketing strategy that contributes
to equipping managers with additional knowledge and offers more reimbursement to their
36

organizations through the improvement of the organization's image and establishing

brand equity. The study of the organization's assets and resources including the human
ones and the surrounding environment provides significant help to managers to figure out
the effects of corporate social responsibility in boosting the relationships with
stakeholders and improving the company's image which are reflected on the economic
and financial performance of the organization. On the other hand, failing to recognize the
importance of CSR and neglecting the continuous observation of the CSR past incidents
would have devastating effects on the company's image and reputation and would
definitely form an undesirable perception about the company's products or services.
The business today is conducted on the global level. This means that companies
should take into consideration the social and cultural factors in their home land as well as
the new market.
Managerial Implications
The concept of corporate social responsibility has been oscillating within the
managerial vocabulary recently. Such rise of the CSR concept is referred to the impact
the corporate social responsibility implementation has on the success of the business.
However, still not many managers see the benefits of CSR on the organization. Thus,
awareness of the impact of CSR should be increased. Incorporating the social
responsibility within the strategy of the organization would achieve such awareness and
encompasses the CSR within the culture of the organization. Planners and top managers
are advised to pay more attention to the CSR concept and to work on setting future
strategies that embrace the corporate social responsibility.
37

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