Benefits of Social Corporate Responsibility in Retail Industry - Research Proposal Example

Research Proposal: Benefits of social corporate responsibility in highly competitive industry: retail industry [Name] [Professor Name] [Course] [Date] Table of Contents Table of Contents 1 Introduction 3 Research purpose, significance and rationale 3 Research Questions 4 Literature Review 5 Strategic implications of CSR 5 Corporate responsibility and corporate value 6 CSR in highly competitive industries 7 Proposed Methodology 10 Conclusion 11 Reference List 12 Introduction Corporate social responsibility (CSR) has taken a centre stage within the highly competitive retail industry over the last decade. Luo and Bhattacharya (2013) established that the concept of CSR has gained traction over the last decade with a large number of corporations adopting the practice based on the assumption that it is a core part of business. A growing body of researchers have reached a consensus that although adopting the practice can be a challenge because of the difficulty in putting a real figure to its value in a business, organizations can gain competitive edge, specifically in highly competitive industries (Galbreath 2008; Luo and Bhattacharya 2013; Sweeney 2009 ). As stated by Williams (2005), CSR refers to situations where a company engages in activities that promote “social good” beyond its interest and specifications by the law. To this end, activities related to CSR have been opined to include integrating social feature, attribute or characteristics into a company’s products and services, promoting the social and economic goals of a community, incorporating progressive human resource management activities and in some case attaining higher levels of environmental performance using a range of methods such as pollution abatement or recycling (Eupen n.d; Ionescu 2006). Research purpose, significance and rationale Although a large number of other definitions have been suggested, no clear definition exists, hence making measurement and theoretical development difficult. Researchers have however moved beyond merely identifying and defining CSR practices to examining the strategic roles and benefits of CSR to organisations. At the same time, there is a growing interest among corporate leaders and managers in the consequences of adopting CRS practices, specifically for executives at multidivisional and multinational corporations. To assess the benefits corporate responsibility in a highly competitive industry, a research is proposed to investigate the benefits of CSR activities to Tesco. The significance of the study is based on the assumption that there is a lack of academic production in regards to significance of CSR in highly competitive retail and manufacturing industries. Hence, a study on such issues will generate new theories and paradigms on CSR benefits in ensuring competiveness of organisations. This present study will seek to enrich discussion on CSR as well contribute to the current literature on CSR and competitive advantage. Research Questions The following research question is proposed: “Do CSR strategies create the competitive advantage of businesses in a highly competitive industry?” The key object analysis is that of a case study of Tesco and document analysis on how CSR contributes to competitive advantage. To achieve the key objective, several research questions are established. a) Is there a correlation between CSR programs and competitive advantage? b) Can CSR create competitive advantage? c) Can CSR activities improve the value of a company in industries that have a high advertising intensity? d) Are CSR benefits are more significant in more competitive industries or less competitive ones? e) Are companies in more competitive industries more likely to participate in CSR activities? Literature Review Strategic implications of CSR Over the last one decade managers and scholars have placed greater focus on the strategic implications of having CSR (Sarvaes and Tamayo 2013; Roman et al. 1999). A large number of theoretical literature suggests that CSR activities can improve an organisation’s profitability and therefore value to the company. Berman et al. (1999) offered an excellent overview of the many elements of CSR and the ways in which they can increase value of the firm by making it more competitive. However, the concern is that the CSR activities are expensive. Indeed, some empirical studies that examined the correlation between the improved value of the company and the CSR activities reported mixed results. For instance, while Roman et al. (1999) reported a positive correlation, Griffin and Mahon (1997) reported a negative correlation. Sarvaes and Tamayo (2013) also found that the implications of awareness of the CSR-competitive relation are turned round for companies that had poor reputation as corporate citizens. Sarvaes and Tamayo (2013) argued that such evidence relates to the view that CSR activities add value to an organisation by making it more competitive, though only under certain conditions. Sarvaes and Tamayo’s (2013) underlying hypothesis was that through advertising, companies reduce the information gap between themselves and their customers. As a result, customers are more likely to find out about the company’s CSR activities and reward the company through loyalty. Corporate responsibility and corporate value A related study by McWilliams and Siegel (2000) established that the implications of CSR activities on the value of a company are positively correlated to advertising frequency. In a later study, McWilliams and Siegel (2000) established that such a correlation should however not imply that companies need to advertise their CSR activities. Rather, the advertising intensity should lead to increased awareness of the company, including its CSR activities. Schuler and Cording (2006) offered a dissenting view. According to the researchers, information intensity is a critical element in the CSR-competitiveness correlation (Schuler & Cording, 2006). This argument is based on the tendency of organisations to disseminate CSR information through advertising, and where the advertising does not strictly talk about a company’s CSR activities the company products are advertised simultaneously. However, Schuler and Cording’s (2006) view can only apply to companies with already established CSR strengths. Sarvaes and Tamayo (2013) argued that companies with CSR concerns would in normal cases not include information on their CSR activities in advertising although if this happened, customers would be more likely to find out about the company’s CSR activities and its products. This can increase a company’s competiveness in a competitive industry. Schuler and Cording (2006) opined that the strength of positive CSR information is greater for companies with a prior good reputation than for those with poor prior reputation. On the other hand, Sarvaes and Tamayo (2013) established that lack of congruence between a company’s current activities and its past reputation; whereby customers are likely to respond positively to the CSR advertisement and to the company’s products. The views are also shared by Barnett (2007), who posited that a customer’s response to CSR activities can lead to positive returns to a company but negative returns to another company depending on customers’ prior information about an organisation’s intentions. Findings of a later study by Du et al. (2010) suggested that when a company has a good prior reputation in the eyes of customers, then a company’s value may increase in the eyes of the customers. CSR in highly competitive industries As stated by Fisman et al. (2008), the benefits of CSR activities are significant in more competitive industries that have high advertising intensity. Fisman’s et al. (2008) implication developed through a simple model of corporate philanthropy, where companies use CSR activities as a mechanism to signal the quality of their products. Hence, companies that are strictly profit-oriented have an incentive to produce low quality products. Fisman et al. (2008) however explains that this is not the case with all firms since some companies also value product externalities, as well as since the stakeholders of the firm care about social welfare. Basing on such self-imposed constraint on the quality of products, companies also seek profit maximization. Such firms engage in CSR to indicate their orientation to products of higher quality (Miron, Petcu & Sobole 2011). Consumers realise that only companies that give precedence to product quality have the willingness to engage in CSR activities since the profit-oriented companies find these investments to be too costly. Due to this, by engaging in CSR practices, companies are able to depict themselves as having high quality of products. According to Schuler and Cording (2006), these kinds of CSR activities tend to be more beneficial in competitive industries as well as in industries with opportunity to indicate product quality. Accordingly, a critical distinction between Schuler and Cording’s (2006) view and that of Fisman et al. (2008) is that of the former is based on measurement of the intensity of advertising. To Fisman et al. (2008), what matters in enabling a company to benefit from competitiveness in the industry’s advertising intensity. To Schuler and Cording (2006), customer awareness is about a company’s advertising intensity. Such a distinction is significant. For instance, industry advertising based on the Fisman et al. (2008) perspective measure the signalling ability rather than customer awareness. Additionally, Fisman et al. (2008) perspective is concerned with positive corporate responsibility efforts rather than weaknesses. Hence, Fisman et al. (2008) perspective is concerned with theorising a nonlinear correlation between CSR-advertising interaction and performance. The researchers found that CSR activities improve the value of a company in industries that have a high advertising intensity. Fisman et al. (2008) also established that CSR benefits are more significant in more competitive industries. In addition, when there is high competition, companies should focus more on signalling product quality in order to benefit from competitiveness. Fernandez-Kranz and Santaló’s (2008) findings are consistent with Fisman’s et al. (2010) argument that found that companies in more competitive industries are more likely to participate in CSR activities. In a study to examine the correlation between competitive advantage and strategic CSR management, Filho, Wanderley & Farache (2010) established a positive correlation. The researchers further discussed that CSR strategies are linked to competitive advantages such as attraction of valuable employees and improving the corporate reputation and image. According to Filho, Wanderley & Farache (2010) social responsibility is today a formidable yet an irreversible component of corporate actions. Swift and Zadek (2002) also posited that effective management of CSR programs in competitive industries can generate substantial benefits in regards to reputation and profits, as well as motivate loyalty from the employees. Similar findings were established by Husted and Allen (2001) who suggested that CSR activities can create competitive advantage if used effectively, further pointing out that there is a positive correlation between strategic social responsibility actions and competitive advantage. An empirical study by Zadek (2005) suggested three generations of companies in regards to their responsible competitiveness. First-generation companies tend to use pain alleviation strategies although for a short term. Second-generation companies tend to establish strategic planning while third-generation firms integrate the concept of social responsibility into their strategies (Fig 1). Figure 1: Responsible competitiveness (Zadek 2005). In contrast to Zadek's (2005; 2006), Mahon (2002) considered reputation to be an integral resource that when managed well, can create competitiveness. Mahon (2002) established that marketing and CSR can improve corporate reputation as well as increase an organisation's competitive edge. Proposed Methodology A case study research methodology is proposed for the survey. Selection of this research method is based on Dean, Lam and Natoli’s (2009) suggestion study that corporate management systems should be based with within the context of their work environment. The research method will focus on benefits of CSR activities to Tesco. Case studies employ a range of data collections methods, including interviews, document analysis, observation and questionnaires (Runeson & Host 2009). In this respect, semi-structured interview method is proposed for the case study. Runeson and Host (2009) explained that an interview is a managed verbal exchange. In this case, it depends significantly on communication skills of the interviewer. The proposed study will rely substantially on the researcher’s ability to create rapport with the participants in the study as well as draw attention to relational elements (Denzin and Lincoln, 2000). Specifically, face-to-face interviewing is proposed for the study since it offers an opportunity to generate rich data since the language used by the participant will be considered crucial in gaining an insight into the benefits of CSR programs to the company. The proposed target group for the study includes the management staff at Tesco. The researcher will approach Tesco’s administration (or human resource department) for a permission to interview the company’s staff. The participants in the study will be selected randomly. Data collection will take three weeks. Participation in the study will be voluntary. It is expected that the HR department at Tesco will help in distributing calls for participation in the study. Further, the department will introduce the researcher to the various departmental heads, who will in turn arrange for the workers to be interviewed randomly. The researcher will collect any other relevant data from the company’s internal reports and employee records. Any other data sources, including informal conversations with the organisation’s management and the employees will be considered, depending on their permission and authenticity and objectivity of the data. Secondary data will also be collected from the company’s official published data and records research. Other sources of secondary data will include articles, textbooks, journal and websites or any other online sources. Questions will essentially be open, hence allowing for and inviting a wide range of answers from the participants, as well as closed, allowing for limited set of answers. In the process of data collection, the researcher will write notes to document responses for the interview. Audio recordings may also be dependent on participants’ approval. Conclusion The findings of the research will inform Tesco of whether its CSR strategies are effective in making the company more competitive. Findings will also offer viable recommendations that companies can use to improve their CSR strategies, improve their reputation and to make their products more competitive. The findings will add to the body of researches that examined the significance of CSR in highly competitive retail and manufacturing industries. Reference List Barnett M 2007, “Stakeholder influence capacity and the variability of financial returns to corporate social responsibility,” Acad. Management Rev. Vol. 32, pp.794–816. Dean, B, Lam, J & Natoli, J 2009, “Review: use of electronic medical records for health outcomes research: a literature review,” Med Care Res Rev 66:611–38. Denzin, N & Lincoln, Y 2000, Handbook of Qualitative Research, Sage Publication Inc, London. Du S, Bhattacharya CB, Sen S 2010, “Maximizing business returns to corporate social responsibility (CSR): The role of CSR communication,” Internat. J. Management Rev. Vol. 12, p.8–19. Eupen, A n.d., Research Proposal: A sensemaking approach of Corporate Social Responsibility, viewed 17 April 2014, http://www.uclouvain.be/cps/ucl/doc/ucl/documents/S_vanEupen.pdf Fernandez-Kranz D, Santaló J 2010, “When necessity becomes a virtue: The effect of product market competition on corporate social responsibility,” J. Econom. Management Strategy vol. 19, p.453–487. Filho, J, Wanderley, L & Farache, F 2010, “Strategic Corporate Social Responsibility Management for Competitive Advantage,” BAR, Curitiba, v. 7, n. 3, art. 5, p. 294-309 Fisman R, Heal G, Nair V 2008, A model of corporate philanthropy, Working paper, Columbia University, New York. Galbreath, J 2008, "Building corporate social responsibility into strategy," European Business Review, Vol. 21 No. 2, pp. 109-12 Griffin J, Mahon J 1997, “The corporate social performance and corporate financial performance debate: Twenty-five years of incomparable research,” Bus. Soc. Vol. 36, p.5–31 Husted, B 2003 “ Governance choices for corporate social responsibility: to contribute, collaborate or internalize?” Long Range Planning, vol. 36 no. 5, p.481-498. Ionescu, M 2006, “The Competitive Advantage of Corporate Social Responsibility," U.P.B. Sci. Bull., Series D, Vol. 68, No. 2, 89-98 Luo, X & Bhattacharya, X 2013, "Corporate Social Responsibility, Customer Satisfaction, and Market Value," Journal of Marketing, Vol. 70, No. 4, pp. 1-18 McWilliams A, Siegel D 2000, “Corporate social responsibility and financial performance: Correlation or misspecification?” Strategic Management J. 21, p.603–609. McWilliams A, Siegel D 2001. “Corporate social responsibility: A theory of the firm perspective,” Acad. Management Rev. 25:117–127. Miron, D, Petcu, M & Sobole, M 2011, "Corporate Social Responsibility And The Sustainable Competitive Advantage," Amfiteatru Economic Vol. XIII No. 29, p.162-168 Sarvaes, H & Tamayo, A 2013, The Impact of Corporate Social Responsibility on Firm Value: The Role of Customer Awareness," Management Science, vol. 59 no. 5. pp1045-1061 Sweeney, L 2009, A Study of Current Practice of Corporate Social Responsibility (CSR) and an Examination of the Relationship Between CSR and Financial Performance Using Structural Equation Modelling (SEM), Dublin Institute of Technology, viewed 17 April 2014, http://arrow.dit.ie/cgi/viewcontent.cgi?article=1022&context=appadoc Roman R, Hayibor S, Agle B 1999, “The relationship between social and financial performance: Repainting a portrait,” Bus. Soc. Vol. 38, p.109–125. Schuler D, Cording M 2006, “A corporate social performance corporate financial performance behavioral model for consumers,” Acad. Management Rev. 31, p.540–558. Swift, T & Zadek, S 2002, Corporate Responsibility and the Competitive Advantage of Nations, The Copenhagen Centre, 17 April 2014, http://www.accountability.org/images/content/0/9/095/Competitive%20Advantage%20-%20Full%20Report.pdf Runeson, P & Host, M 2009, "Guidelines for conducting and reporting case study research in software engineering," Empir Software Eng, Vol. 14, p131–164 Williams, A, Siegel, D & Wright, P 2005, Corporate Social Responsibility: Strategic Implications, Rensselaer Working Papers in Economics Zadek, S 2005, “Going to scale: aligning corporate responsibility to strategies for business and national competitiveness,” Instituto Ethos Reflexões, vol. 6 no. 14, p.1-28. Zadek, S 2006, “Corporate responsibility and competitiveness at the macro level: responsible competitiveness: reshaping global markets through responsible business practices,” Corporate Governance, vol. 6 no. 4, p.334-348. Read More