Corporate Social Responsibility

Corporate Social Responsibility (CSR) is the responsibility a firm has to all of its stakeholders rather than just the shareholders. A CSR approach will take into account societal and environmental concerns.

Benefits of CSR Benefits of a CSR approach include: Improved business reputation Ability to attract customers Ability to recruit quality employees Easier to attract ‘ethical’ investors Competitive advantage Improved employee motivation

Drawbacks of CSR Drawbacks of adopting a CSR approach include: Additional costs It can be argued that the main responsibilities firms have are to their shareholders Efficiency my be reduced by acting in a socially responsible manner

Shared Value Professor Michael E Porter of Harvard Business School believes that rather than adopting a CSR approach, firms should concentrate on creating ‘shared value’. Shared value is concerned with creating economic value in ways that also benefit society.