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...also performed governments through taxations, laws and regulations. By influencing how corporate good deeds are directed, we propose that politicians can and will manipulate CSR for political ends. We review the evidence and test the hypothesis on US state-level data. We then show that firms in liberal states--where the political climate is traditionally in favour of greater redistribution--will tend to engage in more CSR activities than those in more conservative states. More concretely, we show that, in states where governments do more redistribution, firms also engage in more progressive CSR practices. We sketch what the strategic implications of this might be for CSR.
* Corporate social performance
* Corporate social responsibility
* Corporate philanthropy
* Political orientation
* Conservative politics
* Public goods
* Redistribution
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SOME FIRMS UNDOUBTEDLY ENGAGE IN CSR ACTIVITIES FOR PURELY ALTRUISTIC motives (1) but these are the exceptions. Most are attracted by the business case for CSR, i.e. that CSR can be profitable and even become a source of competitive advantage if managed correctly (Porter and Kramer 2002; Smith 1994). (2) The popularity of the trend means that considerable resources are spent each year by corporations in 'voluntary' self-regulation of various kinds (e.g. environmental, quality standards, training) and in the provision of public goods (e.g. public libraries, playgrounds, event sponsorships). Firms find it increasingly lucrative to overlap in areas traditionally catered for by governments. This paper investigates some of the reasons why this may be so and why some firms may have more incentives to do so than others.
Strategic CSR: what are successful firms doing?
The notion that 'good' corporate actions will be rewarded in the marketplace is an appealing one, particularly for proponents of a more socially conscious or 'caring' form of capitalism. The recognition and acceptance of the business case for CSR has fuelled discussions of strategic CSR and introduced notions of 'efficiency'. What constitutes an efficient CSR strategy? One that will fulfil the demands of the firm's major stakeholders at least cost? In a competitive market, successful firms (profits-wise) need to excel in all strategically relevant areas including CSR (Jensen 2002). The underlying rationale is that a firm that consistently adopts the 'wrong' strategies will not become successful or maintain its status.
Important measurement obstacles make it difficult to determine empirically what works. One way around this is to look at what successful firms are doing and whether distinct patterns of CSR practices can be observed. All but a few of the Fortune 500 firms produce dedicated reports documenting their CSR activities (including corporate giving) on an annual basis. Although these reports lack the consistency and transparency associated with financial reports, they indicate that the resources that firms are devoting to CSR initiatives are growing and that there is a shift towards the strategic formulation, implementation and assessment of CSR strategies. Firms are increasingly concerned about what CSR can do for them and are using CSR as a strategic investment tool on the same level as others in the corporate toolkit.
Authors who examine successful firms to gain insight into CSR strategies (3) include Philip Kotler and Nance Lee, who recently published a book that reports findings from 25 case studies involving leading American firms. They offer advice on how to choose among major worthy social causes, how to address a given issue, how to develop, implement and monitor a CSR project, and how to evaluate its output (Kotler and Lee 2005). Smith (1994) also discusses how successful firms are developing approaches that tie corporate giving directly to strategy. Referring explicitly to AT&T, IBM and Levi Strauss, he argues that business units are joining forces to develop CSR strategies that increase their 'name recognition among consumers, boost employee productivity, reduce R&D costs, overcome regulatory obstacles, and foster synergy among business units'. He argues that corporate giving, if targeted appropriately, provides companies with a powerful competitive edge. Porter and Kramer (2002) observe that corporations can and should engage in 'strategic philanthropy' by using their charitable efforts to improve their 'competitive context'--i.e, the quality of the business environment in the location(s) where they operate. (4)
These and other authors (e.g. Carroll and Hoy [1984]) suggest that, to be successful in the long run, a corporation needs to link its overall corporate strategy to its social activities and adopt an explicit CSR strategy that aligns self-interest with the interests of its stakeholders. Porter and Kramer (2002) refer to the 'obsolete perspective' of viewing economic and social objectives as distinct and competing. The concept of 'strategic philanthropy' or more broadly 'strategic CSR' refers to the notion that corporate expenditures can produce simultaneous social and economic gains. An 'efficient' CSR strategy will fit corporate values and adopt a long-term perspective in the selection of, and commitment to, stakeholder causes. These general recommendations reflect the emergence of a planned and practical approach to the practice of CSR among leading firms and the recognition of the importance and acceptability of developing CSR strategies that explicitly promote the firm's economic interests.
There are many papers documenting CSR success stories but few that give a wider empirical and systematic glimpse of the CSR strategies that work. The cause-related marketing literature focuses on the business case for CSR and provides some empirical material on the promotion of certain CSR activities that firms undertake, but none that is wide-ranging enough to establish significant links between overall corporate social performance (CSP) and specific strategic practices.
The next question on the empirical agenda (after establishing the business case for CSR) is the determination of the set of CSR strategies that work, in which context, and why this may be so. In this paper, we examine how the CSR strategies of leading us corporations impact on and/or are influenced by the political environment in which the firm operates. We focus in particular on the relationship between the CSP performance of firms and the political ideology (conservatism versus liberal) of the state in which they are headquartered.
Strategic CSR and politicians
Authors often list opportunities for a 'softer' treatment by regulators and other government authorities as one of the potential advantages of strategic CSR. This is usually done 'in passing', as part of a listing of the benefits associated with CSR (Roberts 1992; Brammer and Millington...
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