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.

• How do you assess and distinguish between corporate social responsibility initiatives of companies fromdevelopedworld and companies from emerging economies?
  The social issues and scale of resources available are often quite different, but the same principles apply. Issues like a stable economy, sound government, or a healthy and educated workforce may be more prominent in developing countries, while environmental, supply chain, and safety issues may be more pronounced in developing countries. Every company, and each location where it operates, has a different set of value chain impacts and competitive context issues that should define its CSR agenda, so the difference between developed and developing economies is only one factor among many.

• Are corporations doing enough on corporate social responsibility? If yes, can you share with us a few exemplary and outstanding instances? If no, why do you think so andwhat needs to be done to sensitize them to be "socially responsible" companies?
  Most companies are not yet doing enough in CSR because they have not truly baked it into their core competitive strategies. Yet, we increasingly see companies competing on the basis of their social responsibility using it as an advantage, not just in a defensive manner. Again, there are many examples in our article.Most recently I went onto Hertz's website to rent a car and found that the categories included not only "mid size" and "compact" but "green" cars as well.

• Has the relevance and importance of Corporate Social Responsibility grown with increased globalization, seamless world and companies being subjected tomicroscopic scrutiny?
  Absolutely, and in several ways. A global standard of corporate behavior is rapidly emerging not legislated anywhere, but an emerging set of expected practices, and CSR is a large part of that.Regardless of the standards of the home country, global companies are working toward this set of expectations. This also means that companies are subject to myriad legislative policies and NGO oversight from different countries, all of which increases the pressure to engage in CSR.

• What is the role of regulation in ensuring high standards in Corporate Social Responsibility? Should they be made mandatory? For instance, mandating the companies to devote a certain percentage of their revenue to CSR initiatives?
  Regulation is important in regard to hazardous activities and financial transparency, but certainly not in regard to expenditures on CSR. As companies buildCSRmoredeeply into their businesses, it becomes harder to identify a separate budget itemthat can be called CSR and merely spending money on CSR doesn't ensure that an initiative is important or effective either to the business or the society.

• What is the role of leadership in ensuring high standards in Corporate Social Responsibility? Should he lead from the front? How should a CEO balance shareholders' interests and stakeholders' interests?
  The role of leadership is extremely important, but again,we don't seeCSR as a conflict between shareholder interests and stakeholder interests.We believe they can be aligned. Our approach to CSR, however, and the concept of creating shared value, means the senior management and the CEO must factor social considerations into every aspect of the business strategy and operations, as well as its product or service. This cannot happen only at lower levels of management.

• What is the role of business schools in sensitizing their students to the importance of corporate social responsibility?
  This is extremely important, and manymore cases and coursematerials need to be developed to support the teaching of CSR in business schools. Understanding CSR is a necessity and a key competitive issue for the next generation of business leaders, and it must be part of their education. But it should not be taught as a separate elective course. CSR considerations should be integrated into the existing courses in strategy, marketing, finance, and management just as it needs to be integrated into every aspect of the business.

  Thank you for the opportunity to share these thoughts.

Note: Answers to questions with † were excerpted and reprinted with the permission of Harvard Business Review "The Competitive Advantage of Corporate Philanthrophy" by Michael E Porter and Mark R Kramer, December 2002. © 2002, HBS Publishing. All rights reserved.