Changing times has always influenced the businesses. Among all the business concepts, corporate social responsibility (CSR) has become the key strategic instrument, which is redefining the way businesses operates in the globalised world. Businesses in India are now under a regulatory framework and are mandated to comply as per the CSR law, if they fall under the CSR ambit. This move by the government has made CSR initiatives competitive with businesses looking to grab attention of the stakeholders.
Industry experts suggests that at present people are living in a reputation economy, where stakeholders’ perceptions have direct impact on business results. Fiinovation suggests that if a company is perceived as socially responsible, they are more likely to engage with the stakeholders which also aids their business. It is expected that not many businesses are deeply focused on CSR, rather they equate CSR with ‘doing good’. While others who are sincerely doing it, are usually the most reputed organisations and have been using CSR as strategic business instrument to convey the purpose of the business. Companies are willing to take advantage of CSR initiatives by influencing the stakeholders’ perception, they will have to focus on the triple bottom line approach for creating the positive impact on society.
There has to be an alignment between the various perspective of the stakeholders. Today, the consumers want to know more about the social initiatives of the businesses. Similarly, the investors would be inquisitive on how willing to know how the social returns of the investments will generate higher dividend for the company. The interest of the government and community about the social initiatives will be different from that of the consumers and investors. Although each stakeholder has their own interest to look after however everything is linked with the impact created on ground and the same being conveyed to the stakeholders.
Backing the aforementioned points, surveys have suggested that nearly all consumers expect the companies to behave in a responsible manner with half of them keeping track of the good work. The consumers are always willing to contribute and make efforts for the greater good. This is because the stakeholders have now become more cynical, especially after the damage caused on the environment by industrial revolutions. Today, the stakeholders perceive that there are two types of organisations, i.e. companies which are going beyond and above with their CSR initiatives; and companies with poor CSR performance. Stakeholders are likely to switch brands to associate with a cause.
There is also a perception amongst the businesses that despite putting in efforts in CSR initiatives there is always criticism from the stakeholders regarding the impact. This is reasonably good for the overall growth of the economy as the stakeholders or consumers are increasingly becoming aware. They are quite skeptical regarding the motive of the businesses in engaging in social initiatives. Green washing or blue washing are terms which the stakeholders are becoming aware of.
Hence, one way of coming out of this dilemma is focusing on the emotional connect by incorporating them in the CSR efforts. In other words, when stakeholders perceive an organisation to hold high integrity, it enhances brand identity. Developing strategic virtues in the minds of the stakeholders, definitely has the potential to turn positive emotion into real competitive advantage.
Hence, the question arises how will the businesses leverage virtues to influence stakeholders’ perceptions? Following are the points which might help the businesses in future CSR interventions:
- Integrate CSR – CSR cannot be separated from the core values of the organisation, rather incorporating them in the overall business strategy will definitely prove to be good.
- Redefine CSR vision – If the social initiatives are not perceived by the stakeholders as effective, it is necessary to realign the vision maintaining an alignment between community needs and business objectives.
- Creating a shared value – Businesses should focus on creating a shared value for the enterprise as well as the communities.
- Effective communications – Not only it is important to focus on creating an impact with the CSR initiatives, but also necessary to communicate the same effectively.
- Feedback – Feedbacks are important mechanisms to engage with the stakeholders. It not only increases the self-value of the stakeholder but also provides adequate information about what or why things are wrong.
Businesses are implementing innovative CSR campaigns to swing the interest of the stakeholders in their favour. However, strategies implemented with weak stakeholder identification might not provide the expected returns. Thus, making it all the more necessary to conduct need and baseline studies for such programmes. A business might win popular CSR awards, but if the stakeholders poorly perceives integrity and empathy, one shouldn’t be surprised with poor response on impact.
“The problem is not our situation but our perception of our situation” – Graham Cooke
(Above thoughts are reviewed and compiled by the author, who is associated with Media & Communications department of Fiinovation, a CSR consulting firm.)
Rahul Choudhary works with Fiinovation as Manager Media from the past four years. He has done his MBA in Rural Management and has 6 years experience in the social development sector.
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Disclaimer: The views expressed by the author(s) in this feature are entirely his own and do not necessarily reflect the views of India CSR.