Business Case Studies, Executive Interviews, Mark R Kramer on Corporate Social Responsibility

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Executive Interviews: Interview with Mark R Kramer on Corporate Social Responsibility
September 2007 - By Dr. Nagendra V Chowdary

Prof Mark R Kramer
Founder and Managing Directorof FSG.
Senior Fellow in the CSR Initiative of the Mossavar-Rahmani Center for Business in Government at Harvard's Kennedy School of Government.

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    • How to practice strategic CSR? What are the critical elements?
      The critical elements are first, to examine the company's value chain and identify both the positive and negative social or environmental consequences of each activity. Companies must then work to mitigate negative impacts, and may choose to highlight positive ones as a source of competitive differentiation. Second, companies must examine social conditions in the key regions where they operate, and identify the social constraints that limit their productivity or competitive edge. They should then pick a small number of social issues to address through the use of their resources, including their philanthropy, in order to make a significant change in those conditions that will be favorable both to society and to the business.

      Few Phrases are as overused and poorly defined as 'strategic philanthropy.' The term is used to cover virtually any kind of charitable activity that has some definable theme, goal, approach, or focus. In the corporate context, it generally means that there is some connection however vague or tenuous, between the charitable contribution and the company's business. Often this connection is only semantic, enabling the company to rationalize its contribution in public reports and press releases. In fact, most corporate giving programs have nothing to do with a company's strategy. They are primarily aimed at generation goodwill and positive publicity and boosting employee morale.

      Cause related marketing through which a company concentrates its giving on a single cause or admired organization, was one of the earliest practices cited as strategic philanthropy, and it is a step above diffuse corporate contributions. At its most sophisticated, cause related marketing can improve the reputation of a company by linking its identity with the admired qualities of a chosen non profit partner or a popular cause. Companies that sponsor the Olympics, for example, gain not only wide exposure but also an association with the pursuit of excellence.And by concentrating funding through a deliberate selection process, cause related marketing has the potential to create more impact than unfocused giving would provide.

      However, cause related marketing falls far short of truly strategic philanthropy. Its emphasis remains on publicity rather than social impact. The desired benefit is enhanced goodwill, not improvement in a company's ability to compete. True strategic giving, by contrast, addresses important social and economic goals simultaneously, targeting areas of competitive context where the company and society both benefit because the firm brings unique assets and expertise.

    • Is there any distinction between Corporate Responsibility and Corporate Social Responsibility? Is it correct to presuppose that,most of the times the distinction between these two gets blurred resulting in, at such times, an undue credit for the companies?
      We find that CSR is the most commonly used termin the US, while CR is more common in the UK and Europe. Other than these regional differences,we do not see a consistent distinction inmeaning between them.

    • Let's look at some hypothetical instances. An oil refining company pledges its support to an afforestation project. A large retailer decides to slash its fleet size by 35%. A paints manufacturing company undertakes to clean up the local waters. On the other hand, a software company's employees work for a day in a month in a local community hospital. A company adopts and funds a local school. Of these, what can be characterized as Corporate Social Responsibility initiatives and Corporate Responsibility initiatives?
      Again, we don't see the distinction in terminology that you refer to. However, the first examples are clearly value chain impacts, whereas, the latter are acts of corporate philanthropy that seem to be unrelated to the business. We call social issues "generic" when they are unrelated to the business competitive context and value chain activities. Much corporate philanthropy presently goes to generic issues, but we see that as less helpful to the business and, because it does not engage the expertise and resources of the business, less impactful for society.

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