Globalization and the Law
Comment 2: Michael E. Porter and Mark R. Kramer, Strategy and Society: The Link between
Competitive Advantage and Corporate Social Responsibility, HARVARD BUSINESS REVIEW 84,
no. 12, 78-92 (December 2006)
Total Word Count: 664
Summary:
The article emphasizes on a critical issue for all companies: how to take corporate social
responsibility(CSR) in a productive and beneficial way. While almost every company pays
attention to CSR, some companies didn't do it in an effective way as they “pit business against
society and think CSR in a generic way”.1 The authors started the analysis by stating justification
for CSR, including moral obligation, sustainability, license to operate and reputation.2 The author
believes the license-to-operate approach is more pragmatic compared to others.3 The approach
can help the company identify the important social issues to stakeholders and make the decision
about them.4 The authors then emphasize the integration of business and society. 5 They believe
business and society need each other in the development and expansion process.6A shared value
is essential in the relationship between the company and society.7 It is also critical to figure out
what points to pay attention to the intersection. The article focuses on both inside-out linkages (a
company impinges on society in the normal course of business) and outside-in linkages (external
social condition influences company). 8
The authors state that a company, no matter how big it is, cannot meet up to the needs of
the whole society. 9 A company could tailor its responsibility to the need of the society with a
competitive context.10 If a company tries to focus on a generic social issue, it may end up with
nothing achieved since there are so many problems for society left even for NGOs or
governments. Instead, a company can choose the issue related to its value chain or competitive
context where the company has a more direct influence on.11Moreover, the company cannot treat
Michael E. Porter & Mark R. Kramer, Strategy and Society: The Link between Competitive
Advantage and Corporate Social Responsibility, 84 HARV. BUS. REV, 78, 78 (2006).
2 Id. at 81.
3 Id. at 82.
4 Id.
5 Id. at 83.
6 Id.
7 Id. at 84.
8 Id.
9 Id.
10 Id.
11 Id. at 85.
1
all the issues the same way. It should rank all related social issues and allocate its resources.12
Only in this way can a company achieve healthy relations with society and solve the social
problem. The article further emphasizes the importance of social agenda that company should
adjust its practices with the changes of society. For conclusion, the article suggests that best
practice for a strategic CSR is hard to be distinguished from daily business.
Analysis:
I agree with the authors that the strategic CSR is beneficial to companies in various ways,
especially for business-to-customer companies. Customers see images of the company from its
behaviors. It is important for companies to come up with niche strategies to attract more
customers, especially in a competitive market. Taking CSR shows a positive image of a
company. Take Wholes Foods as an example13, all aspects of the value chain are related to
Whole Foods’ competitive positioning. 14 There were no supermarkets at that time targeting at
middle class who pay much attention to organic food and are willing to pay a higher price for
better products. Using the Blue Ocean strategy, Whole Foods made itself a success and
advocated its environment-friendly products. Whole Foods gets a high reputation for the
protection of the environment, thus attract more customers.
While the article explains the importance for companies to figure out strategic CSR to
leverage their resources and benefit the society15, it obviously neglects some aspects from the
operation of the company. We need to admit that only the strategies that generate profits could
be accepted by shareholder and board members. Some strategies mentioned in the article could
benefit the company in the long term16, it is practically infeasible for managers to come up a
strategic CSR idea which may sacrifice short-term profit to benefit society. It may require
unanimous willingness to benefit society and not prioritize profit earning. I doubt whether this
theory could be practiced in the management of corporations.
12
Id.
Id. at 91.
14 Id.
15 Id. at 89.
16 id. at 84.
13