Provide a Discussion of the Strengths and Possible Limitations of the Strategic Approach to Csr Suggested by Porter & Kramer.

As the concept of CSR is becoming increasingly recognized, more and more companies try to implement strategic approach to that aspect in their corporate governance. Even though the topic of CSR is definitely not new to both academic and corporate environment, there is still a bone of contention whether strengths of such corporate strategy exceed its limitations.

Multination companies around the world understand now very well that separation of CSR and business strategy would mean a loss of ample source of opportunity, innovation and competitive advantage. Such combination is no longer perceived as a zero-sum game. Companies used to respond to institutional and civil pressure neither in strategic nor operational but cosmetic way, shielding themselves from public opinion with sheer numbers without taking into consideration impact of their actions.

Four old-fashioned arguments supporting strength of CSR in business that are focused on tension rather than interdependence can be specified: moral obligation, licence to operate, reputation and sustainability(Porter, M.E. & Kramer, M.R., 2006). Even though they are essentially true, they represent missed opportunities because they cannot identify, prioritize or address specific social issues. The last of the arguments, i.e. sustainability is often associated with triple bottom line of economic, ecological and social aspects. It represents meeting needs of firm’s direct and indirect present as well as future stakeholders by integration of both short-term and long-term aspects (Dyllick, T. & Hockerts, K., 2004).

This outlook can be described as responsive CSR in opposition to strategic CSR that goes beyond good corporate citizenship and mitigating harmful value chain impact. Social responsibility in business strategy is about achieving unique position with lower costs and better services (Porter, M.E. & Kramer, M.R., 2006).

A modern approach to CSR, which really underscores its strength is known as CSV i.e. Creating Shared Value. This business strategy can be developed by reconceiving product and markets, redefining productivity in the value chain or building supportive industry clusters at the company’s location (Porter, M.E. & M.R. Kramer, 2011). Opposed to traditional CSR, shared value approach doesn’t only create social benefit, but also value for all stakeholders, including the company. After identifying all the social needs, this business strategy can be implemented in various corporate aspects such as logistics, resource use, procurement, distribution or employment. It results in benefits such as more productive resource and waste management, increased workforce productivity, lower internal cost of accidents, attracting more customers and a general rise in efficiency and level of innovation. Probably the biggest advantage of CSV is that this approach is integral to competing profit maximization. On top of that, in this way companies may acquire legitimacy