Corporate Social Responsibility in Marketing

© Free University Bozen-Bolzano 1

09.11.06

Manuel Demetz

Corporate Social Responsibility

CSR: a new challenge for a different marketing approach?

061109-lec-csr-marketing-a


Content

1.  What is happening around us 2.  The economic principle and ethics 3.  The market and the problem of externalities 4.  The economic principle in management 5.  What characterizes CSR 6.  Effective CSR management 7.  CSR in the marketing framework 8.  CSR and competitiveness 9.  The ‚Chiquita Case‘


What is happening around us

Retraction of the government (lack of of political power) •  Social responsible behaviour (CSR) is transferred to individuals

and corporations.

Pluralism and functional differentiation in society •  For many of the problems in modern society a mutual agreement

cannot be found; ongoing deployment of different societal systems that are not interrelated by an unifying concept of ethical/moral values.

Evolvement of communication technologies (telematics) •  Speeding-up of the information economy creates global

competition/awareness. Not only at the business level, but also at an extended cultural level.


The economic principle and ethics

Maximising self interest defines economic behaviour •  Historically, Adams Smith argued: if individuals behave as

maximising their ‘self interest’ (> utility) the overall society will benefit.

Free market economy and the ‘invisible hand’ •  The efficiency of free markets (where utility maximising

individuals behave rational) will lead to prosperity for the overall society.

The critique from ethics •  Utility as the solely (rational) principle for decision-making and

behaviour fulfils not social relevant criteria. Respectively, morality is not fulfilled at the required level.


The market and the problem of externalities

•  Externalities are effects of transactions that are not reflected in the market price.

•  Externalities may be positive or negative in their consequence. •  Externalities affect stakeholders that are not involved in the

decision-making process/transaction. •  The orthodox economic solution (Coase-Theorem): if

externalities do exist, market participants will find a mutual agreement – in absence of transaction cost.

The emerging problem of externalities is a main cause for the claim of corporate social responsible behaviour of corporations.


The economic principle in management

The shareholder-value approach •  The management is legitimated by the shareholders to pursue

their interests. •  Wealth distribution (under circumstances of uncertainty) to the shareholder is

the primary goal of a corporation. •  Profit-maximization becomes the management-maxim. •  Externalities > the theory itself makes it difficult to be concerned about

externalities.

The stakeholder-value approach (a real alternative?) •  The management has to pursue the interest of different stakeholders

(customers, employees, nation, nature etc.). •  No clear maxim for the management > difficulties in defining the stakeholders

and respectively the rules for the management. •  Externalities > the theory itself is very ambiguous


CSR: And what makes the difference?


What characterizes CSR

Establishment of normative principles (business ethics) •  The problem of externalities is one of the central issues of CSR;

CSR consequently is concerned with normative aspects of management decisions (ethical analysis).

Holistic concept of CSR (positive management theory) •  To achieve sustainable competitive advantages for the overall

organisation. Thus, CSR should not focus on single functional aspects in marketing, finance, etc., but primarily on strategic issues.


Effective CSR management

The normative aspect •  In contrast to economic theory it is not the purpose of CSR to

find a proper negotiation about (negative) externalities but to avoid negotiations.

The communicational aspect •  Moral communication evokes morality and thus creates moral

awareness and moral behaviour.

The resources based-view aspect •  Stakeholders are important input factors for developing

organizational-specific resources (that might by intangible) and the management should care about them.


CSR in the marketing framework

CSR as a source of innovation •  Aspects of morality as source for innovation

CSR as a framework for market research •  Analysis of the socio-economic environment (strong focus on communication

aspects = what characterizes the ‘semiotic space’ of the organization).

CSR as a communication approach •  Provide for dialogue-oriented communication.

CSR in the brand management context •  Identity oriented brand management (identity in this context should provide

for valuable meaning that links the brand to social-relevant issues).


CSR and competitiveness

The main drivers •  Managing risks to earn/maintain a license to operate •  Enhance corporate reputation and brand image •  Improve relations with stakeholders/communities •  Improve access to markets and customers

•  Network economy •  Increase employee morale and thus productivity


Thank you for your attention.

Manuel Demetz

Corporate Social Responsibility in Marketing

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