When and How to Pursue Corporate Social Responsibility with Core Competencies

• Author: Michael A. Webb
• Published date: 01 September 2014
• Date: 01 September 2014
• DOI: http://doi.org/10.1111/basr.12039

When and How to Pursue

Corporate Social

Responsibility with

Core Competencies

MICHAEL A. WEBB

ABSTRACT

We first establish that the pursuit of corporate social

responsibility (CSR) can enhance the society’s welfare

when both market and government imperfections occur,

and demonstrate this is likely in most locales across the

world. Second, we show that CSR initiatives are most

likely successful and sustainable when a firm accurately

identifies the benefits and costs of potential CSR initia-

tives and implements them consistent with its core com-

petencies. We provide three reasons for a firm to focus

CSR initiatives on core competencies: to reap economies

of scale and scope in building company-wide knowledge

and skills; to promote worker productivity that is integral

to the firm; and to exploit the fixed costs associated with

managing workers. Each reason provides a distinct way

to minimize the costs and increase the gains from pur-

suing CSR initiatives and provides implications for

implementing CSR initiatives.

Michael A. Webb is a Professor in Department of Economics, Williams College of Business,

Xavier University, Cincinnati, OH. E-mail: webbm@xavier.edu.

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Business and Society Review 119:3 417–434

© 2014 Center for Business Ethics at Bentley University. Published by Wiley Periodicals, Inc.,

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INTRODUCTION

Corporate social responsibility (CSR) initiatives—including

family-friendly, philanthropic, green, and sustainability

projects—have risen dramatically in recent years, and

there is little sign of the trend reversing. The latest KPMG Cor-

porate Responsibility Report, covering more than 3,400 compa-

nies in 34 countries, finds that the proportion of CSR reporting

jumped from 24% of companies in 1999 and 41% in 2005 to 64%

in 2011, with 95% of the largest 250 companies in the world

publishing CSR reports in 2011. A recent IBM survey of more

than 1,000 CEOs found that they were planning to increase

investments in CSR initiatives by 25% over the next 3 years,

faster than any other investment trends discovered in the survey.

Company web sites tout CSR initiatives, while activists, NGOs,

and government leaders cite the public gains from CSR, and

business executives promote CSR as a way to enhance profits.

We begin by asking when CSR initiatives can constitute good

public and private policy. The first and second sections show that

CSR can contribute to the well-being of society when both

markets and government institutions work imperfectly, a condi-

tion we show that is likely to be met in most countries. Even then,

well-meaning initiatives may not have the desired social effects,

and current attempts to determine whether or not CSR initiatives

affect a company’s private return may be misleading and do not

always provide policy guidance for companies. The costs and

uncertainty of benefits of the many CSR initiatives at its disposal

mean that a company needs to carefully account for the benefits

and costs of each CSR initiative. By clearly accounting for the cost

and assessing the benefits of proposed CSR initiatives, a company

can ensure that projects undertaken will be effective and sus-

tained.

The third section provides three reasons a company should

focus CSR initiatives on core competencies in order to ensure

their effectiveness and sustainability. First, it will reap economies

of scale and scope in building company-wide knowledge and skills

in its existing core competencies, for both its profit-oriented and

CSR initiatives. Second, the company can promote the individual

productivity of its workers in ways that are integral to the firm.

Finally, the focus on core competencies will allow it to exploit the

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