Leadership, Corporate Social Responsibility and Sustainability, Part 3: Strategy Focus

Early corporate citizenship initiatives were often directed at supporting commu­nity causes ranging from charitable organizations to cultural institutions like municipal symphonies and operas. Companies have been historically helpful in developing the cultural infrastructure of many communities. Whether these cor­porate philanthropy efforts were beneficial to the company or only to selected individuals is very subjective. However, many of these early efforts were not scrutinized for their contribution to the strategic objectives of the firm. Michael E. Porter and Mark R. Kramer have argued that a company needs to choose its social initiatives strategically. They have advanced the concept of shared value, which they define as “policies and operating practices that enhance the competi­tiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates. Shared value creation focuses on identifying and expanding the connections between societal and eco­nomic programs.”

Porter and Kramer identify three approaches that apply to international marketers:

(1) delivering attractive products that are truly beneficial to society; (2) removing problems in the supply chain that are both costly and socially detrimental, such as reducing. greenhouse gasses; and (3) enabling local cluster development to help communities become more competitive.

They argue that “we need a more sophisticated form of capitalism, one imbued with a social purpose. But that purpose should arise not out of charity but out of a deeper understanding of competition and economic value creation.” The best interna­tional marketers are driven by the desire to create value and improve their com­petitive positions, so shared value becomes the right and smart thing to do.

Paying the Higher Price

We are all paying a higher price because of global terrorism– an issue identified by our Delphi study. As freedom suffers, so does international marketing. In most instances, terrorism is not an outgrowth of choice but rather a lack of it. Terrorists may succeed in reducing the freedom of other but not in increasing their own. Who is typically most affected by terrorist acts? Attacks aimed at businesses, such as the infamous bombings of  U.S. franchises abroad, do not bring big corporations to their knees. The local participants, the local employees, the local investors, and the local customers are affected the most.

Who can protect themselves against such attacks and who can afford to protect targets? Only the more wealthy countries and companies can. They have the choice of where to place their funds, with whom to trade, and whether to hold the enemy at bay through a security bubble created by changing business formats via exporting or franchising. The poor players do not have choices. The local businesses, the nations with economies in development, and the poor customers continue to be exposed to further acts of terrorism with very limited ability to influence events.

But international marketers can enable the disenfranchised to develop alternatives. Multinational firms can invest in the world’s poorest markets and reduce poverty while increasing their own revenue. With support from shareholders and the benefit of good governance, global marketers can, and should, continue in their role as social change agents. If it is worthwhile to fulfill the needs of large segments of people, even at low margins, then it will be done. International marketers want to create new customers and suppliers and they are delighted when, in the process, they can bring about freedom from extremes of hunger, sickness, and intolerance.

This is an excerpt from Dr. Czinkota’s book Global Business: Positioning Ventures Ahead, co-authored by Dr. Ilkka Ronkainen.

Michael R Czinkota and Ilkka A Ronkainen, Global Business: Positioning Ventures Ahead (New York: Routledge, 2011), pg. 235-236.

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