When is it necessary to include CSR within a business's corporate strategy?

Abstract

This study provides a nuanced exploration of the impact of Corporate Social Responsibility (CSR) on business profitability. CSR is the level of consideration a business gives towards its social and environmental impact. We sought to determine the levels of CSR engagement that exist within different industries, and to identify contributory causes to these differences. The impetus for this study is derived from the movement away from the use of a traditional criterion (of price, quality and convenience) in product selection. Modern consumers now consider a company’s engagement with legal, ethical and philanthropic responsibilities within their decision-making process. As consumer-buying is linked to firm profitability it is important for businesses to ensure their CSR obligations are met. Our study consisted of a multi-method approach. Firstly, a scenario-based survey was undertaken. Respondents were made to choose between two products. Factors exemplar of a CSR scandal were included. The questions pertained to three overarching industries—food, clothing and technology. To test concurrent validity, results were compared to the percentage-change in revenue of three major brands before and after a CSR scandal. Each company correlated with a different industry. This was to determine if our survey was reflective of a wider phenomenon. Our findings reveal that in industries with multitudes of competitors producing substitutes CSR is important for the maintenance of profitability. Comparatively, CSR is less important in industries with higher product differentiation. Our subsidiary findings reveal that consumer attachment to a product may also offer an avenue for companies to mitigate CSR obligations. Show more