Cross-Cultural Management Journal

Volume XVI, Issue 2 / 2014

Patrizia GAZZOLA
Department of Economics, Insubria University, Varese, Italy
Gianluca COLOMBO
Institute of Management, University of Italian Switzerland, Lugano, Switzerland

CSR INTEGRATION INTO THE Theoretical

article
CORPORATE STRATEGY

Keywords
CSR
Strategy,
Stakeholder

JEL Classification
M14, P17

Abstract

The aim of this research paper is to develop a model for the integration of ethics and
Corporate Social Responsibility (CSR) into the company strategy as a source of competitive
advantages. CSR is an organization's obligation to consider the interests of their customers,
employees, shareholders, communities and to consider the social and environmental
consequences of their business activities. By integrating CSR into the corporate strategy and
stakeholder management, organizations can ensure that the increasing of shareholder value
doesn’t overshadow the need to behave ethically to their stakeholders. The research is based
on the theoretical framework that supports a thesis of beneficial impact of the development
and implementation of CSR plan: by planning out CSR as part of a corporate strategy,
companies can achieve the ultimate goal of creating both social value and corporate value.

331
Cross-Cultural Management Journal
Volume XVI, Issue 2 / 2014

1. Introduction 3. Literature review

The aim of the study is the proposal of a model for According to Freeman and Hasnaoui (2010: 420)
the integration of the CSR into the strategy, culture, nowadays Corporate social responsibility is not yet
and everyday operations of a company. a universally adopted concept as it is still
The fundamental problem with CSR practice is that understood differentially despite increasing
companies usually don’t have a CSR strategy, but pressures for its incorporation into business
rather numerous disparate CSR programs and practices .
initiatives (Rangan et al., 2012). Simons (1995) argues that since management
A growing number of companies develop their systems provide the tools that permit to choose,
corporate social responsibility in response to a organize, deploy and monitor the strategy,
variety of social, environmental and economical managers use management systems to drive
pressures. The goal is to send a signal to the strategic renewal. The company that introduces the
different stakeholders: shareholders, employees, CSR into the companies’ management systems
investors, consumers, public authorities and NGOs should: a) give evidence of the ‘real’ will of
(Colombo and Gazzola, 2013 a). companies to integrate CSR into their strategy; b)
The question for the organizations is not only provide the means for effectively changing
whether to engage in CSR, but what is the best way operational practices.
for crafting CSR programs that reflect a company’s Porter and Kramer (2006) consider the importance
business values, while addressing social, of the integration between strategy and society, and
humanitarian and environmental challenges. between competitive advantage and corporate
Considering the many disparate drivers of CSR social responsibility, proposing an analytical model
within a company, and the many different based on the social impacts of the value chain and
motivations underlying the various initiatives, it is the role of corporate social responsibility in the
crucial that the organizations carefully integrate competitive context.
CSR into their corporate strategies (Carroll and Mirvis and Googins (2006) identify five stages of
Shabana, 2010), but incorporating corporate social evolution in the process of integration between
responsibility into all strategic decisions is, social responsibility and corporate strategy. Sharp
arguably, one of the most difficult challenges a and Zaidman (2010) analyze processes by applying
manager faces. Jarzabkowski’s model (2005) to the integration of
By planning out CSR as part of a corporate social responsibility into corporate strategy. The
strategy, organizations can ensure that profits and triangular model highlights the interconnected
increasing shareholder value don’t overshadow the relationships among management, organization
need to behave ethically to their stakeholders community and strategy. The interconnection
(Colombo and Gazzola, 2012). among these three elements is expressed in the
firm’s routines and procedures and aims at
2. Methodology
reflecting the social values of management and
This study shows, through a model, what path a
social strategy into the firm’s activities.
company takes, what stages of CSR are in the path,
According with McKinsey (2009), it appears that
the strategic logic of these stages and the different
although most executives agree on the strategic
challenges the company faces.
interest of CSR, none of them fully include CSR
The paper is structured as follows. In the first part,
aspects when implementing business projects: the
in order to develop a coherent model of
integration of CSR within management systems
development, we reviewed pivotal literature within
would remain weak.
the areas of inquiry, based on a backward and
Despite the importance of management systems
forward searching strategy. In the second part we
when integrating CSR into business, little research
grow a model based on the organizational growth
has been conducted on this topic (Adams, 2002;
model by Greiner (1998), on the stage model for
Berland & Essid, 2009; Norris & O'Dwyer, 2004).
the development of corporate by Mirvis and
Googins (2006) and on the stages of the 4. The CSR and the impact on society.
development of CSR in corporate strategy by The recent increased attention on CSR is a result of
Molteni (2007). pertinacious work by governments, media and
We used peer reviewed and practitioner-oriented NGOs, holding, large corporations, responsible for
journal articles, book chapters and working papers. the societal and environmental consequences of
Our hypothesis is: there is a positive impact of the their business practices (Porter and Kramer, 2006).
development and implementation of CSR plan. There are many factors that fully or partially
The research is based on the theoretical framework influenced the increase of the attention on CSR.
that supports a thesis of their positive relationship. The main important drivers of CSR are:
(Gazzola, 2014) 1. Ecological Sustainability. Pollution, waste,
natural resource depletion, climate change and the
increasing of the CSR discussion and heighten
expectations for proactive corporate action.

332
 Cross-Cultural Management Journal
Volume XVI, Issue 2 / 2014

(Werther and Chandler, 2013); The foundation of CSR actually refers to the role of
2. Globalization. The multinational corporations business in society, and to management practices
increase their power and increased their that have a positive impact on society and
responsibility. Globalization has fueled the need to environment. The European Union, through its
filter all strategic decisions through a CSR lens to European Commission on CSR, defines CSR like
ensure optimal outcomes for different stakeholders. “the responsibility of enterprises for their impacts
(Werther and Chandler, 2013); on society” (European Commission, 25/10/2011).
3. Social media. The technology development gives This definition considers all the impacts of the
citizens immediate access to transparent companies on society that integrates social,
information and news at the click of a computer environmental, ethical and human rights in their
key. Through the Internet and other electronic activities and strategy, in close collaboration with
mediums the flow of information has shifted back its stakeholders, with the aim of:
to the stakeholders giving them a beneficial - Maximizing the creation of value for its
influence. (Werther and Chandler, 2013); shareholders and other stakeholders and the
4. Reputation. Honest CSR is a way to protect the community, through a long-term strategic approach
reputation, the company image and the brand. The to CSR and development of products, services and
brand depends on public perception of the innovative business models.
corporation. Kramer & Porter 2006 (Werther and - Identifying, preventing and mitigating its possible
Chandler, 2013); negative impact (Gazzola, 2012).
5. Moral Obligation. Companies adopt CSR
5. The expectations of the stakeholders
because they believe that they have a responsibility
The changes in the economic and social context
to be a good citizen and “do the right thing”
mean that a greater attention to the satisfaction of
(Kramer and Porter, 2006);
the expectations of the stakeholders will impact the
6. Sustainability. Meeting the needs of the present
success of the firm in dealing with new challenges:
without compromising the ability of future
1. the globalization process places new
generations to meet their own needs (WCED,
responsibilities on firms regarding the evolution
1987). The companies focus on environmental and
of the economies of poor countries;
community management because they believe that
2. the reputation of the firm is inextricably linked
it will be beneficial for the company in the long run
to its environmental policy;
(Kramer & Porter 2006);
3. the social sensitivity of consumers has grown,
7. License to operate. A great number of companies
and is increasingly more attentive to the
engage in CSR only because they are forced to
behaviors and to the ethical values promised by
follow regulations and obtain permissions from
the firms;
government, communities, or other relevant
4. the weight assumed by the respect of human
stakeholders. (Kramer and Porter, 2006).
rights and the rights of workers imposes new
We can consider CSR a concept by which
constraints on the management of the human
companies integrate the principles of social and
resources of the entire supply chain;
environmental responsibility in their operations as
5. the growth of human capital underscores the
well as in the way they interact with their
need for personnel policies that productively
stakeholders. This definition has two perspectives:
employ staff;
- social and environment responsibility in their
6. the unification of financial markets calls for
operations requires internal change processes to
growing levels of correctness in behavior and
integrate the principles into business operations;
transparency (Molteni, 2003).
- interactions with stakeholders require stakeholder
We are assisting an increasing of the demand for
engagement (Zollo et al., 2009).
transparency and growing expectations that
In the current business environment, CSR has
corporations measure, report, and continuously
become not only the “right thing to do”, but it has
improve their social, environmental, and economic
also become the “competitive” thing to do.
performance. As it was just noted, we are passing
The frontiers of corporate social responsibility are
form a conception that perceives CSR as an
moving to a relationship between business and
obligation to one that recognizes CSR as a strategy
society. It is a new way of looking at the companies
with opportunities to exploit (Colombo and
and their role in society, both in practice and in
Gazzola, 2013 b).
management education (Waddock and McIntosh,
The KPMG in the International Survey of
2009). Management education, which has been
Corporate Responsibility Reporting (2013) has
criticized in the financial crisis period, has an
studied the world’s largest 250 companies and it
important role to play, but in a changed form.
assesses the quality of their CSR reports, these
Corporate responsibility is becoming a social
were identified as the top 250 companies listed in
movement (Ditlev-Simonsen and Gottschalk,
the Fortune Global 500 ranking for 2012. In this
2011).
survey they are referred to as “the G250”

333
Cross-Cultural Management Journal
Volume XVI, Issue 2 / 2014

companies, they operate in 14 industry sectors and CSR:

are head- quartered in 30 different countries. 1. Informal and defensive CSR. The complexity of
Most reporting companies in the G250 (83 percent) the integration of the CSR in the strategy depends
state in their reports that they have a CSR strategy on factors such as the size of the enterprise and the
(Fig. 1). nature of its operations. For most small and
medium-sized enterprises, especially micro-
6. The CSR and the corporate strategy enterprises, the CSR process is likely to remain
The work is focused on developing and integrating informal and intuitive. In other companies the CSR
CSR objectives into corporate strategy and it practices, which are typically limited, are
becomes a driver of its development. To integrate undertaken only if and when it can be shown that
CSR into the corporate strategy is an opportunity shareholder value will be protected as a result.
offered by the development of corporate strategy (Visser, 2010)
aligned with business goals, deeply rooted in the 2. Charitable CSR. A company supports various
principles and values of corporate social social and environmental causes through donations
responsibilities (Ganescu, 2012). and sponsorships, for community groups or civil
If a company builds a business strategy to align society organizations. The company starts to use
economic, social and environmental performance to communication tools such as sustainable report.
long-term business values, corporate social 3. Systemic CSR. CSR is focused on the micro
responsibility becomes part of the business and level, supporting social or environmental issues
gives long-term value for the company and for the that happen to align with its strategy, but without
society (Rochlin et al., 2005, p. 8). changing that strategy
Where negative perceptions of organizations 4. Innovative CSR. The CSR focuses its activities
prevail, brand boycotts often follow as consumers, on identifying and tackling the root causes of our
particularly in wealthy industrialized countries, present unsustainability and irresponsibility,
seek to punish parent organizations. But here lies typically through innovating business models,
an opportunity for a new approach to competitive revolutionizing their processes, products and
strategy based around social resources. (Meehan et services and lobbying for progressive National and
al., 2006). international policies. At this stage the process of
Social Responsibility cannot be just a response to integration of CSR into the strategy is completed.
problems when they arise. Only if the company CSR focuses on understanding the interconnections
includes social responsibility since its foundation in of the macro level system – society and ecosystems
the business strategy, social responsibility, as a – and changing its strategy to optimize the
concept, is integrated into daily decisions making. outcomes for this larger human and ecological
Preferably, to obtain best results the CSR should be system.
aligned with the company’s specific corporate 5. Dominant CSR, it's relating the CSR activities to
objectives and core competencies. Companies, the company’s core business often through
integrating the CSR into strategy, maximize the adherence to CSR codes and implementation of
value of corporate responsibility commitments. The social and environmental management systems,
identification of critical stakeholders, the definition which typically involve cycles of CSR policy
of objectives in order to satisfy them, and the development, goal and target setting, programmed
utilization of a reporting tool are crucial steps to implementation, auditing and reporting.
integrate the CSR into strategy.
7. Conclusion
Companies that are comparable in terms of size and
Many organizations today are adopting CSR, as a
power, and are influenced by the same external
part of corporate strategy. CSR helps in building
conditions, choose different CSR programs and
corporate image as socially, ecologically,
initiatives or social responsibility strategies. This
environmentally conscious and responsible
choice may be influenced by various pressures and
organization. Further CSR also helps in making
incentives, which generate innovation pressure, as a
management of organizational change smoother.
first step in implementing the strategy (Van
The model build in the research shows the
Bommel, 2011, p. 900) or even by local or national
integration of CSR into Strategy with an
perception of the impact of these strategies. Then
incremental approach. Not always the evolutionary
the drivers of CSR influence in different way the
path follows exactly the stages.
companies.
The CSR is a maturation process inside of an
It’s possible to identify 5 stages of the integration
organization. The phases of the model show a
of the CSR in the strategy (Fig. 2). The figure
typical journey. There are companies jumping
shows how the development of CSR is linked to the
phases of the model because they have to react to a
corporate culture and the transition from one stage
crisis and companies that have CSR in their culture
to another (Greiner, 1998) is determined by
from the beginning. We can understand that the
changing the management culture.
model could be used also to understand in what
Below we describe the 5 stages of development of

334
 Cross-Cultural Management Journal
Volume XVI, Issue 2 / 2014

stage of development the companies are and what [7] Ditlev-Simonsen, Caroline D. and Gottschalk,
was the evolutionary path. Petter, 2011, “Stages of growth model for
Some companies show the orientation to CSR from corporate social responsibility”. International
the beginning for the presence of a strongly Journal of Corporate Governance, 2 (3/4):
leadership sensitive to social and environmental 268–287.
issues. Others companies could not implement CSR [8] European Commission, 2011, “A renewed EU
gradually and have had to implement a strategy 2011-14 for Corporate Social
development accelerated CSR in corporate strategy Responsibility”. European Commission,
by combining the stages of the model. Brussels 25/10/2011.
The model allows to: [9] Freeman, I. & Hasnaoui, A. (2010). The
- see at what stage of development of CSR Meaning of Corporate Social Responsibility:
is the company and The Vision of Four Nations, Journal of
- see if there are conditions for the next Business Ethics, 100 (3), 419-443
stage. [10] Ganescu, Mariana Cristina, 2012, “Corporate
According to our hypothesis the model also shows social responsibility, a strategy to create and
that the socially responsible actions should be consolidate sustainable businesses”.
designed into the corporate strategy, as they can Theoretical and Applied Economics, 11(576):
contribute significantly to the generation of the 91-106.
wealth of intangible assets, which are the [11] Gazzola P., (2014) Corporate Social
foundation of competitive advantage of modern Responsibility and companies’ reputation,
enterprises. Problems generated by not integrating Network Intelligence Studies Volume II, Issue
socially responsible practices into the corporate 1 (3), 2014 pp 74-84, ISSN-L: 2344 – 1712
strategy can be noticed when assessing the costs [12] Gazzola Patrizia, 2012, “CSR per scelta o per
and benefits of implemented projects, in the necessità?”. Santarcangelo di Romagna,
selection of technology, in the relationship with the Maggioli Editore.
community, and in the structure of incentives for [13] Greiner, Larry E., 1998., “Evolution and
performance. revolution as organizations grow”. 1972,
Harvard Business Review, 76(3): 55.
Reference list:
[14] Jarzabkowski P (2005). Strategy as practice.
[1] Adams, C. A. 2002. Internal organisational An Activity Based Approach, Sage, London.
factors influencing corporate social and ethical [15] KPMG International, 2013, “The KPMG
reporting - Beyong current theorising. Survey of Corporate Responsibility Reporting
Accounting, Auditing & Accountability 2013”. KPMG, December 2013.
Journal, 15(2): 223-250. [16] Kramer, Mark R. and Porter, Michael E., 2006,
[2] Berland, N., & Essid, M. 2009. RSE, systèmes “Strategy and Society: The Link Between
de contrôle et pilotage de la performance Competitive Advantage and Corporate Social
globale Proceeding of 28th AFC (French Responsibility”. Harward Business Review,
Management Accounting) Annual Congrees 84(12): 78-92.
(Poitiers, France) - 27-29 May 2009. [17] McKinsey. 2009. Valuing corporate social
[3] Carroll, Archie B. and Shabana, Kareem M., responsibility. McKinsey Global Survey
2010, “The Business Case for Corporate Social Results, February 2009.
Responsibility: A Review of Concepts, [18] Meehan, John, Meehan, Karon, Richards,
Research and Practice”. International Journal Adam, 2006, “Corporate social responsibility:
of Management Reviews, 12: 85-105. the 3C-SR model”. International Journal of
[4] Colombo, Gianluca and Gazzola, Patrizia, Social Economics, 33(5/6): 386 -398.
2012, “Estetica ed etica dell’organizzazione: [19] Mirvis P, Googins B (2006). Stages of
semplicità e complessità dell’agire corporate citizenship, Calif. Manage. Rev.
sostenibile”. Estados Gerais da Gestão nos 48(2) ): 104-126.
Países de Expressão Latina (SGMPEL) Lisboa, [20] Molteni, Mario, 2003, “L’impresa tra
22-23-24 de Março de 2012. competitività e responsabilità”. Impresa &
[5] Colombo, Gianluca and Gazzola, Patrizia, Stato, ottobre-dicembre, 65: 23-27.
2013 a, “Stakeholder engagement between [21] Molteni, Mario, 2007, “Gli stadi di sviluppo
managerial action and communication.” The della CSR nella strategia aziendale”. Impresa
Annals of the University of Oradea – Progetto, Ditea, 2.
Economic Sciences Tom XXI, 2ndt [22] Norris, G., & O'Dwyer, B. 2004. Motivating
issue/dicember 2013, pp. 97-105. socially responsive decision making: the
[6] Colombo, Gianluca and Gazzola, Patrizia, operation of management controls in a socially
2013 b, “Aesthetics and ethics of the responsive organisation. The British
sustainable organizations”. Europen Scientific Accounting Review, 36: 173-196.
Journal ESJ, December 2013, special edition,
2: 291-301

335
Cross-Cultural Management Journal
Volume XVI, Issue 2 / 2014

[23] Porter, M. E. & Kramer, M.R. (2006). Strategy Business”. Journal of Business Systems,
& society: The link between competitive Governance and Ethics, 5(3): 7-22.
advantage and corporate social responsibility, [30] Waddock, Sandra and McIntosh, Malcolm,
Harvard Business Review, 84(12), 78–92 2009, “Beyond Corporate Responsibility:
[24] Rangan Kash,, Chase, Lisa and Karim, Sohel, Implications for Management Development”.
2012, “Why Every Company Needs a CSR Business and Society Review, 114 (3): 295-
Strategy and How to Build It.”. Harvard 325.
Business School Working Paper, 12-088, April [31] WCED United Nations World Commission on
2012. Environment and Development, 1987,
[25] Rochlin, Steve, Witter, Kathleen, Monaghan, “Brundtland Report”. WCED.
Philip and Murray, Vicky, 2005, “Putting the [32] Werther, William and Chandler, David, 2013,
corporate into corporate responsibility”. “Strategic Corporate Social Responsibility”.
Raymond P. (ed.), “Accountability forum: Sage Publications.
Corporate responsibility and core business”. [33] Zollo Maurizio, Minoja Mario, Casanova
London: Greenleaf Publishing, pp. 5-13. Lourdes, Hockerts Kai, Neergaard Peter,
[26] Sharp N, Zaidman N (2010). Strategization of Schneider Susan, Tencati Antonio, 2009,
CSR, J. Bus. Ethics 93. “Towards an internal change management
[27] Simons R (1995). Levers of control, Harvard perspective of CSR: evidence from project
Business School Press, Boston RESPONSE on the sources of cognitive
[28] Van Bommel, Harrie W.M., 2011, “A alignment between managers and their
conceptual framework for analyzing stakeholders, and their implications for social
sustainablity strategies in industrial supply performance”. Corporate Governance, 9 (4):
networks from an innovation perspective”. 355-372.
Journal of Cleaner Production, 19: 895-904.
[29] Visser, Wayne, 2010, “The Age of
Responsibility: CSR 2.0 and the New DNA of

Biographical sketch
Patrizia Gazzola is Assistant Professor of Accounting and Financial Statement at the Department of Economics,
Insubria University of Varese, Italy.
She is Member of the Scientific Board of the Research Center on Ethics in Business and Corporate Social
Responsibility (CREARES).
She conducts research in Corporate Social Responsibility, in Sustainability Reports and in Financial Statement.
She writes articles and books about Corporate Social Responsibility.
Email: [email protected]

Gianluca Colombo is Professor of Management an entrepreneurship. Former Head of the Department of

Management. He is member of the SMS (Strategic Management Society), the AIMS (Association Internationale
de Management Stratégique), the EURAM – European Academy of management), the SDS (System Dynamics
Society).
His field of research are: Merger & Acquisitions, Family Business, System thinking and complexity in
management, Logic and rhetoric of strategic conversation
Email: [email protected]

336
 Cross-Cultural Management Journal
Volume XVI, Issue 2 / 2014

Figure 1. G250 companies that have a CSR strategy

Source: KPMG International THE KPMG Survey OF Corporate Responsibility Reporting 2013. December 2013
Figure 2. 5 stages of development of the CSR in the strategy

Source: (adapted and integrated from Molteni, 2007 and from Mirvis, and Googins, 2006)

337
Cross-Cultural Management Journal
Volume XVI, Issue 2 / 2014

338